Educational illustration only — not a product illustration, quote, or advice.
Actual results depend on specific policy design, carrier dividend scale (non-guaranteed), loan provisions, and recognition method. Policy loans are collateralized loans from the insurer. Consult a licensed professional and obtain a full carrier illustration.
Policy Design
For Policy Loan, cash value growth uses the year-by-year rates for the selected issue age and risk class (to age 121). Cash Withdrawal/Repay and Market Loan use the flat Growth Rate below.
Account & Growth
Cash & MKT only
Cash & MKT only
Loans (concurrent supported)
Other Loan Charges
0.50–2.00%
$500–$2,500
0.25–1.00%
0–3.75% if SBA
Repayment rate must be higher than the Policy Loan Rate.
Results
Year-by-Year (selected)
Policy Loan: Interest accrues daily on the outstanding principal. Scheduled payments (calculated at the higher repayment rate) are applied to principal first. Accrued interest is billed at year-end. Excess = recommended payment − amount applied to principal + interest. Once the loan is fully paid, remaining scheduled payments are pure excess, added to the account/PUA and compounded at the crediting rate.
Why the paths differ under Net Outlay: With Net Outlay, total cash out is capped at the annual contribution. During repayment years, the contribution drops by the repayment amount.
Policy Loan: The loan is collateralized — cash value never stops growing. The only loss is the reduced contribution during repayment years. "Recover opportunity cost" adds back a lump sum sized to close that gap after compounding.
Cash Withdrawal/Repay: The withdrawal actually leaves the account. That money earns nothing until it's repaid, and repayments return gradually, earning only from the month they arrive. Closing this gap requires replacing both the principal and the growth it would have earned while gone — a larger amount, because the cost of a sinking fund is the earnings you didn't receive. The recovery amount is sized for the policy path; on the cash path it closes most but not all of the gap.