Ken Has a Variable Life Policy and Recently Learned That

Ken has a variable life policy and recently learned that he can borrow against its cash value to help pay for some of the expenses he's incurring while pursuing a graduate degree. Which of the following statements about the loan he can get is true?

A) Ken can borrow at most only 50% of the cash value, and only as long as he's had the policy for at least three years.
B) Since Ken is essentially borrowing his own money, the loan is interest-free.
C) Ken never has to repay the loan, but if he chooses not to do so, his wife, Barbie, won't get as much when he dies.
D) Ken has been misinformed. He cannot borrow against the cash value of a variable life policy because the cash values of these policies fluctuate constantly.

Correct Answer:

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