What happens if I didn’t pay back interest on a loan from my life insurance?

If you have taken out a loan from your life insurance policy and have not paid back the interest, the interest will be added to the outstanding loan balance. The policy loan interest rate will vary depending on the insurance company and the policy terms, but it is typically lower than the interest rate charged by traditional lenders. If the interest on the policy loan is not paid, the outstanding balance of the loan will continue to increase over time, and the death benefit payable to the beneficiary upon the policyholder's death will be reduced by the outstanding loan balance plus any accrued interest. If the outstanding loan balance plus interest exceeds the policy's cash value, the policy will lapse, and the coverage will end. It's important to keep up with the loan interest payments to avoid these negative consequences. If you're having difficulty making the interest payments on your policy loan, you may want to consider other options, such as paying back the loan in full, reducing the death benefit, or surrendering the policy.