What is a policy loan and how does it affect the death benefit and cash value?

• A. A policy loan increases cash value and death benefit.
• B. Policy loans do not accrue interest and have no impact on death benefit.
• C. A policy loan is a loan taken against the cash value; it reduces the cash value and may reduce the death benefit; interest accrues and unpaid loans can cause lapse.
• D. Policy loans are only available if the policy has no cash value.

Answer: (C)