POLICY DEBT. The Policy Debt is the amount necessary to repay the policy loan in full and is equal to the Loan Account plus any accrued Loan Interest Charge. The Policy Debt reduces any amount otherwise payable under the policy. Loan Processing on Policy Anniversary β On each policy anniversary we will adjust the values of the Policy Debt, Loan Account and Loan Account Value so that they are equal to each other. To do this, we calculate the difference between the Policy Debt and the Loan Account Value. If the Policy Debt is greater than the Loan Account Value, which is generally the case when the policy Loan Interest Charge has not been paid, a new loan will be taken for the excess and will be added to the Loan Account. If the Loan Account Value is greater than the Policy Debt, which is generally the case when the policy Loan Interest Charge has been paid, the excess will be transferred according to your most recent premium allocation instructions.
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Sources: Life Insurance Policy (Pacific Select Exec Separate Acct Pacific Life Ins), Life Insurance Policy (Pacific Select Exec Separate Acct Pacific Life Ins), Insurance Policy (Pacific Select Exec Separate Acct Pacific Life Ins)