Borrowing Against Cash Value Life Insurance Policy: Tax-Free Loans and Interest Payments

This chapter explores the concept of borrowing against a cash value life insurance policy, explaining that these loans are not taxable income but can have consequences such as policy lapses or high taxes on outstanding loans. It emphasizes the tax-free nature of loans compared to distributions and warns about the possibility of paying more interest on the loan than earning on the cash value, leading to a decrease in cash value.