Common use of LOAN VALUE Clause in Contracts

LOAN VALUE. After the first Policy Year, the Loan Value is the Net Cash Surrender Value on the date of the request, less interest on the amount of the loan to the end of the Policy Year, and less the amount We calculate as the value of the remaining monthly deductions to the end of the Policy Year. The amount of the loan may not be more than the Loan Value. If You request an increase to an existing loan, the amount requested will be added to the Outstanding Loan. Loan Interest. Interest on a loan accrues daily at an interest rate not greater than the Policy Loan interest rate shown in POLICY INFORMATION section. Loan interest is due on each Policy Anniversary. If the interest is not paid when due, it will be added to the Policy Loan and will bear interest at the loan interest rate. The unpaid interest will be allocated based on the proportion that Your unloaned value in the Guaranteed Account and Your values in each of the Subaccounts bear to the total unloaned value in Your Account Value. Loan Repayment. You may repay all or part of an Outstanding Loan at any time while this Policy is in force. However, since We normally treat all payments as a payment of Premium, if You wish all or any portion of a payment to be applied as an Outstanding Loan payment, You must include a Written Notice to this effect. An Outstanding Loan payment will be allocated on the basis of the Premium allocation percentages then in effect, and will reduce the loaned portion of the Guaranteed Account. Failure to repay an Outstanding Loan will not cause this Policy to lapse unless, on a Monthly Anniversary, the Net Cash Surrender Value is less than the total monthly deduction then due, and the No Lapse feature is not in effect. In that case, this Policy will lapse and the Grace Period provision will apply. A Policy Loan will have a permanent effect on Your Benefits under this Policy even if it is repaid. Depending on the investment results of the Subaccounts and the interest rates credited to the Guaranteed Account while a Policy Loan is outstanding, such effect could be favorable or unfavorable.