Life insurance loans could involve a tax penalty if certain conditions are not met.

Name: Life insurance loans could involve a tax penalty if certain conditions are not met.
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Question

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If a life insurance policyholder takes out a loan against the policy and the policy later lapses or is surrendered, the outstanding loan balance may be considered taxable income. To avoid this penalty, the loan must be repaid in full or the policy must be maintained until death.

Life Insurance Loans Could Involve a Tax Penalty If Certain