What type of policies does the 'Loan values clause' specifically apply to?

The 'Loan values clause' specifically applies to permanent policies because these types of insurance, such as whole life and universal life insurance, build cash value over time. The cash value can be borrowed against, which is a feature not found in term policies, as term insurance is designed to provide coverage for a specific period and does not accumulate any cash value.

The loan values clause is an important aspect of permanent life insurance because it allows policyholders to access some of the cash value while still maintaining the life insurance coverage. This clause stipulates how much can be borrowed and the implications of taking out a loan against the policy. The ability to take loans against accumulated cash value is a key reason why many people choose permanent policies over other types of insurance.

In contrast, temporary policies do not have cash value, and therefore, the loan values clause does not apply to them. This distinction highlights the specific financial benefits associated with permanent insurance that are not available in term or temporary policies.