A policy loan is borrowing secured against an eligible life insurance policy's value. The insurer sets the available amount, interest rate, and repayment terms. Outstanding principal and interest can reduce later death benefit, maturity benefit, or surrender value, and substantial debt may affect the policy's continuation.
A Nepalese policyholder should compare the loan's total cost with other borrowing and understand whether interest must be paid separately. Access is not automatic for every product; pure term life insurance usually lacks the necessary cash value. Obtain the current loan terms in writing before treating the policy as emergency savings.