Pay the policy loan back to yourself (with interest), rebuilding your cash value. To repay a loan, you must make regular payments to the lender as specified in your loan agreement. Payments typically consist of both principal (the original amount borrowed) and interest (a fee for borrowing the money).

Note: Each policy loan stands as a separate transaction inside the IUL life insurance policy.

When maxing out the cash value of an IUL life policy, this is done by overfunding the policy up to the MEC level (Modified Endowment Contract).

When overfunding an IUL life insurance policy, it is not necessary to pay back the loan.

In most cases, the loan charge is less than the return on the money, meaning the cash value outruns the cost of the loan.