How does a large policy loan affect the death benefit?

As part of the policy review, cash value access can reduce the amount available to support the policy and the death benefit. When the contract terms are examined, if loans and withdrawals become too large, the contract can lapse, and a lapse with gain in the policy may create taxable income. For a coverage review, beneficiary wording, policy ownership, and whether the contract is in force on the date of claim can determine who actually receives the benefit. Use the insurer's contract and current illustration or benefit summary as the primary documents, then have a licensed professional explain the applicable guarantees, exclusions, surrender rules, and beneficiary provisions in writing.