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The Pennsylvania Code website reflects the Pennsylvania Code changes effective through 53 Pa.B. 1782 (March 25, 2023).

31 Pa. Code § 82.25. Policy loan provisions.

§ 82.25. Policy loan provisions.

 A variable life insurance policy, delivered or issued for delivery in this Commonwealth, other than a term insurance policy or pure endowment policy, shall contain a provision which provides for policy loans after the policy has been in force for 3 full years. The provision for policy loans may not be less favorable than the following:

   (1)  At least 75% of the cash surrender value of the policy may be borrowed.

   (2)  The amount borrowed shall bear interest at a rate not to exceed that permitted by section 410F of the act (40 P. S. §  510e).

   (3)  An indebtedness shall be deducted from the proceeds payable on death.

   (4)  An indebtedness shall be deducted from the cash surrender value upon surrender or in determining a nonforfeiture benefit.

   (5)  For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of intent to cancel the policy if the excess indebtedness is not repaid within 31 days after the date of mailing the notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay the charges, a report shall be sent to the policyholder containing the information specified by §  82.74 (relating to warning statements for flexible premium policies).

   (6)  The policy may provide that if, at any time, so long as premiums are paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, then the policyholder may increase the variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110% of the corresponding increase in cash value and by furnishing evidence of insurability that the insurer may request.

   (7)  The policy may specify a reasonable minimum amount which may be borrowed at any time, but the minimum does not apply to an automatic premium loan provision.

   (8)  A policy loan provision is not required if the policy is under the extended insurance nonforfeiture option.

   (9)  The policy loan provisions shall be construed so that variable life insurance policyholders who have not exercised the provisions are not disadvantaged by the exercise thereof.

   (10)  Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment, except that a stock insurer may provide the amounts for policy loans from the general account.


   The provisions of this §  82.25 adopted August 4, 1978, effective September 5, 1978, 8 Pa.B. 2171; amended April 28, 1989, effective April 29, 1989, 19 Pa.B. 1835; corrected June 30, 1989, effective retroactive to April 29, 1989, 19 Pa.B. 2754. Immediately preceding text appears at serial pages (137043) to (137045).

Cross References

   This section cited in 31 Pa. Code §  82.21 (relating to insurance policy qualification); 31 Pa. Code §  82.23 (relating to mandatory policy benefit and design requirements); and 31 Pa. Code §  82.26 (relating to other policy provisions).

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