Loans may generally be obtained against the cash value of a personal life insurance policy and policy loan proceeds

Accelerating benefits under a life insurance policy generally refers to accessing a portion of the death benefit in cases of terminal illness or critical care, not to loans against cash value. Loans do not affect how benefits are accelerated; they simply provide access to cash value without impacting the death benefit unless the loan remains unpaid at the time of death.

While the death benefit of a life insurance policy may be subject to Federal estate tax, the loans taken against the cash value do not incur this tax while the insured is alive. The tax implications of life insurance policies depend on ownership and the insured’s estate at the time of death, not on outstanding loans during the policyholder's lifetime.

Interest on policy loans is generally charged by the insurance company and does not generate nontaxable interest income for the borrower. The loan itself does not create taxable interest income, but the interest paid on the loan is not considered nontaxable income; instead, it is a cost of borrowing against the cash value.