Final answer:
Life insurance policy loans accrue interest which is added to the loan balance, increasing the amount owed over time.
Step-by-step explanation:
When you take out a loan on the cash value of a life insurance policy, it does indeed accrue interest. The correct answer to your question is
B) Yes, life insurance policy loans accrue interest, and the interest is added to the loan balance. This means that over time, if the interest is not paid out of pocket, it will be added to the total amount you owe and will increase the debt against your policy's cash value. It's important to manage this loan carefully to ensure it does not diminish the death benefit or cause the policy to lapse.
Yes, life insurance policy loans accrue interest, and the interest is added to the loan balance. When a policyholder takes a loan against the cash value of their life insurance policy, they are essentially borrowing from the insurance company. The interest charged on the loan is added to the loan balance, which means that the total amount owed increases over time.