What must a life insurance policy include regarding loan interest rates?

A life insurance policy must include a statement of the loan interest rate and the calculation method to ensure complete transparency and inform policyholders about the terms governing their loans against the policy's cash value. This requirement supports consumers by outlining the specific costs associated with borrowing against their life insurance policy, thus enabling them to make informed financial decisions.

The inclusion of this information is crucial, as it clarifies how interest is calculated and allows policyholders to anticipate their repayment obligations. By requiring that both the fixed interest rate or the variable rate specifics, along with the calculation method, are clearly stated, policyholders are better positioned to understand the financial implications of any loans taken against their policies.

Moreover, this requirement upholds good business practices and protects consumers from unexpected costs associated with policy loans, reinforcing the insurance industry's commitment to transparency and fairness.