Tax Facts

187 / Is a life insurance policy loan deductible as a claim against the estate?

Updated: October 20, 2026 at 03:30 PM
No. A policy loan is considered an advancement of part of the policy proceeds, not an enforceable claim against the estate.1 Only the excess of the proceeds over the amount of the policy loan is includable in the gross estate.





1.     Treas. Reg. §§ 20.2042-1(a)(3), 20.2053-4; Kennedy v. Commissioner, 4 BTA 330 (1926).

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