{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-4008","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-4008","heading":"Policy loan","body":"A. There shall be a provision that after three (3) full years'\n\npremiums have been paid, the insurer, at any time while the policy\n\nis in force, will loan on the execution of a proper note or loan\n\nagreement by the owner of the policy, and on proper assignment of\n\nthe policy and on the sole security thereof, at a specified rate of\n\ninterest, not in excess of six percent (6%) per annum, on policies\n\nissued prior to January 1, 1976, a sum equal to or, at the option of\n\nthe owner of the policy, less than the cash value of the policy at\n\nthe end of the current policy year and of any dividend additions\n\nthereto. A policy issued on or after such date and prior to July 1,\n\n1982, shall contain either, but not both, of the following policy\n\nloan interest rate provisions:\n\n1. A provision that a policy loan shall bear interest at a\n\nspecified rate, not in excess of eight percent (8%) per annum; or\n\n2. A provision that all loans under the policy shall bear\n\ninterest at a variable rate, not in excess of eight percent (8%) per\n\nannum, specified from time to time by the insurer. The effective\n\ndate of any increase in such variable rate shall not be less than\n\none (1) year after the effective date of the previous rate.\n\nB. With respect to policies providing for a variable rate, the\n\ninsurer shall:\n\n1. When a loan is made and when notification of interest due is\n\nfurnished, give notice of the variable rate currently effective;\n\n2. As to any loans outstanding forty (40) days before the\n\neffective date of any increase in the variable rate, give notice of\n\nany such increase at least thirty (30) days before such effective\n\ndate; and\n\n3. As to any loans made during the forty (40) days before the\n\neffective date of this increase, give notice of such increase when\n\nthe loan is made.\n\nEvery such notice shall be given as directed by the policy owner\n\nand any assignee as shown on the records of the insurer at its home\n\noffice.\n\nC. With respect to policies issued on or after July 1, 1982,\n\nthe following provisions shall apply:\n\n1. For purposes of this subsection, the \"Published Monthly\n\nAverage\" means:\n\na. Moody's Corporate Bond Yield Average - Monthly\n\nAverage Corporates as published by Moody's Investors Service, Inc.,\n\nor any successor thereto, or\n\nb. in the event that Moody's Corporate Bond Yield\n\nAverage - Monthly Average Corporates is no longer published, a\n\nsubstantially similar average, established by regulation issued by\n\nthe Commissioner;\n\n2. Policies issued on or after July 1, 1982, shall provide for\n\npolicy loan interest rates as follows:\n\na. a provision permitting a maximum interest rate\n\nof not more than eight percent (8%) per annum, or\n\nb. a provision permitting an adjustable maximum\n\ninterest rate established from time to time by the life insurer as\n\npermitted by law;\n\n3. The rate of interest charged on a policy loan made under\n\nsubparagraph b of paragraph 2 of this subsection shall not exceed\n\nthe higher of the following:\n\na. the Published Monthly Average for the calendar\n\nmonth ending two (2) months before the date on which the rate is\n\ndetermined, or\n\nb. the rate used to compute the cash surrender\n\nvalues under the policy during the applicable period plus one\n\npercent (1%) per annum;\n\n4. If the maximum rate of interest is determined pursuant to\n\nsubparagraph b of paragraph 2 of this subsection, the policy shall\n\ncontain a provision setting forth the frequency at which time the\n\nrate is to be determined for that policy;\n\n5. The maximum rate for each policy must be determined at\n\nregular intervals at least once every twelve (12) months, but not\n\nmore frequently than once in any three-month period. At the\n\nintervals specified in the policy:\n\na. the rate being charged may be increased whenever\n\nsuch increase as determined under paragraph 3 of this subsection\n\nwould increase that rate by one-half of one percent (1/2 of 1%) or\n\nmore per annum, or\npolicy must be determined at\n\nregular intervals at least once every twelve (12) months, but not\n\nmore frequently than once in any three-month period. At the\n\nintervals specified in the policy:\n\na. the rate being charged may be increased whenever\n\nsuch increase as determined under paragraph 3 of this subsection\n\nwould increase that rate by one-half of one percent (1/2 of 1%) or\n\nmore per annum, or\n\nb. the rate being charged must be reduced whenever\n\nsuch reduction as determined under paragraph 3 of this subsection\n\nwould decrease that rate by one-half of one percent (1/2 of 1%) or\n\nmore per annum;\n\n6. The life insurer shall:\n\na. notify the policyholder at the time a cash loan\n\nis made of the initial rate of interest on the loan,\n\nb. notify the policyholder with respect to premium\n\nloans of the initial rate of interest on the loan as soon as it is\n\nreasonably practical to do so after making the initial loan. Notice\n\nneed not be given to the policyholder when a further premium loan is\n\nadded, except as provided in subparagraph c below,\n\nc. send to policyholders with loans reasonable\n\nadvance notice of any increase in the rate, and\n\nd. include in the notices required above, the\n\nsubstance of the pertinent provisions of paragraphs 2 and 4 of this\n\nsubsection;\n\n7. The loan value of the policy shall be determined in\n\naccordance with Section 4029 of this title, but no policy shall\n\nterminate in a policy year as the sole result of a change in the\n\ninterest rate during that policy year, and the life insurer shall\n\nmaintain coverage during that policy year until the time at which\n\nthe policy would otherwise have terminated if there had been no\n\nchange during that policy year;\n\n8. The substance of the pertinent provisions of paragraphs 2\n\nand 4 of this subsection shall be set forth in the policies to which\n\nthey apply;\n\n9. For purposes of this subsection:\n\na. the rate of interest on policy loans permitted\n\nunder this subsection includes the interest rate charged on\n\nreinstatement of policy loans for the period during and after any\n\nlapse of a policy,\n\nb. the term \"policy loan\" includes any premium loan\n\nmade under a policy to pay one or more premiums that were not paid\n\nto the life insurer as they fell due,\n\nc. the term \"policyholder\" includes the owner of\n\nthe policy or the person designated to pay premiums as shown on the\n\nrecords of the life insurer, and\n\nd. the term \"policy\" includes certificates issued\n\nby a fraternal benefit society and annuity contracts which provide\n\nfor policy loans;\n\n10. No other provision of law shall apply to policy loan\n\ninterest rates unless made specifically applicable to such rates;\n\nand\n\n11. The provisions of this act shall not apply to any\n\ninsurance contract issued before the effective date of this act\n\nunless the policyholder agrees in writing to the applicability of\n\nsuch provisions.\n\nD. The company may deduct from such loan value any existing\n\nindebtedness on or secured by the policy not already deducted in\n\ndetermining such cash value including interest due or accrued, and\n\nany unpaid balance of the premium for the current policy year, and\n\nany interest which may be allowable on the loan to the end of the\n\ncurrent policy year; provided, that the policy shall reserve to the\n\ninsurer the right to defer the granting of a loan, other than for\n\nthe payment of any premium to the insurer, for six (6) months after\n\nthe application therefor is made. The policy may also provide that\n\nif interest on any indebtedness is not paid when due it shall then\n\nbe added to the existing indebtedness and shall bear interest at the\n\nsame rate, and that if and when the total indebtedness on the\n\npolicy, including interest due or accrued, equals or exceeds the\n\namount of the loan value thereof, then the policy shall terminate\n\nand become void, but not until at least thirty (30) days' notice\nif interest on any indebtedness is not paid when due it shall then\n\nbe added to the existing indebtedness and shall bear interest at the\n\nsame rate, and that if and when the total indebtedness on the\n\npolicy, including interest due or accrued, equals or exceeds the\n\namount of the loan value thereof, then the policy shall terminate\n\nand become void, but not until at least thirty (30) days' notice\n\nshall have been mailed by the insurer to the last-known address of\n\nthe insured or policy owner and of any assignee of record at the\n\nhome office of the insurer.\n\nThe policy, at the insurer's option, may provide for an\n\nautomatic premium loan, subject to an election of the party entitled\n\nto elect. No condition other than as herein provided shall be\n\nexacted as a prerequisite to any such loan. This provision shall not\n\nbe required in term insurance, nor shall it apply to temporary\n\ninsurance or pure endowment insurance, issued or granted in exchange\n\nfor lapsed or surrendered policies.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"e6f09004c53c48c123d6f264bb3d6ffb3c8c57a532e272b8be31d0a391bb2658","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-4007","next":"us-ok/okla.-stat.-tit.-36-36-4009"},"notice":"GroundRules: Original legal text. Not legal advice."}