One of the most valuable features of a life insurance policy is the ability to borrow from your policy's cash value. However, taking out a policy loan can have a significant impact on your policy's performance. Also, any outstanding loan balance and interest will reduce proceeds paid to your beneficiary. Talk to your Northwestern Mutual Financial Network Representative before making any decisions. Unless instructed differently all payments made on policies with loans will be applied to the loan balance prior to being applied to premiums.

Applying for a Loan
To apply for a policy loan you'll need to complete a Policy Loan Agreement form. To obtain a copy of the form, ask your Financial Representative or call Northwestern Mutual at 1-866-424-2609, from 7:00 AM to 6:00 PM CST.

How Interest Affects Your Policy
Interest on your loan accrues daily and is billed annually on the policy anniversary date until the loan is repaid. Unpaid interest is added to principal where it continues to accrue and compound. This may result in the loan exceeding the cash value of your policy. If this happens, outside funds will be needed to avoid termination and a potentially significant tax.

How Loans Affect Certain Policy Types

• Variable Universal Life policies—Taking a loan from a Variable Universal Life will permanently affect your policy, even if you repay the loan in full.

• Policies Classified as Modified Endowment Contracts—Loans and loan interest are taxable when taken as ordinary income to the extent of the gain in the policy. Northwestern Mutual is required by the Internal Revenue Service (IRS) to report either the amount you borrow or the gain in the contract, whichever is less. If you are under age 59 1/2 when you take the loan, the IRS may assess an additional 10 percent penalty on the taxable amount. Modified Endowment Contracts may be subject to other special tax treatment. Talk with your tax consultant before making your decision.

Repaying Policy Loans
Repaying your loan is important. It helps keep your policy in force and maintains the level of protection you planned to provide for your beneficiaries. Repayment can restore your policy's death benefit and cash value. As you pay off your loan, you will also reduce your interest payments—a lower balance means lower annual interest charges. A loan spread charge will be deducted each month while the loan is outstanding. See your policy for details.

To repay a policy loan, contact your Financial Representative, or call Northwestern Mutual at 1-866-424-2609 from 7:00 AM to 6:00 PM CST. If you prefer, a Request for Service form may be completed on line.