(a) A policy loan provision is not required in term insurance policies, nor in pure endowments issued or granted as original policies or in exchange for lapsed or surrendered policies.
(b) Loans must be made available at any time while the policy is in force after premiums for three full years have been paid and a cash value is available.
(c) The loan clause must provide for proper assignment of the policy to the company.
(d) The policy must be the sole security for the loan.
(e) Insurance Code Chapter 1110, concerning Interest Rates on Certain Policy Loans, deals with interest rates. Insurers may comply with Chapter 1110 by refiling reprinted and renumbered policies with a new loan provision or by filing a loan endorsement that may be attached to newly issued policies on and after an effective date specified by the insurer. The maximum rate of interest must be specified in the policy or loan endorsement. The policy may provide that interest may be made payable in advance to the end of the current policy year.
(f) The loan clause must provide for lending a sum equal to or, at the option of the policy owner, less than the cash value of the policy and any dividend additions to the policy.
(g) The policy may provide that the company may deduct from such loan value any existing indebtedness on the policy and any unpaid balance of the premium for the current policy year and may collect interest in advance on the loan to the end of the current year.
(h) The policy may provide that loans may be deferred for not more than six months after application for the loan is made. The six-month period may commence with the date of receipt of the request by the company, if the policy so provides.
(i) The loan clause must provide that failure to repay any such advance, or to pay interest on the loan, will not void the policy until the total indebtedness to the company equals or exceeds the cash value of the policy. The policy may not be terminated merely for failure to pay loan interest when due. Since the policy may be voided when the indebtedness equals or exceeds the cash value, this provision may be so worded that benefits cease upon the precise moment that the indebtedness equals such value.
(j) No condition other than as provided in this subchapter will be exacted as a prerequisite to any such loan.

Source Note: The provisions of this §4.607 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250