Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.  Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse or affect any guarantees against lapse.  Additional premium payments may be required to keep the policy in force.  In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.  Withdrawals are generally income tax-fee, unless the withdrawal amount exceeds the amount of premium paid.  Policy loans are not usually subject to income tax unless the policy is classified as a modified endowment contract (MEC) under IRC Section 7702A.  However, withdrawals or partial surrenders from a non-MEC policy are subject to income tax to the extent that the amount distributed exceeds the owner’s cost basis in the policy.  Tax laws are subject to change.  Clients should consult their tax professional.  Keep in mind that most life insurance policies require health underwriting and, in some cases, financial underwriting.