Loans against insurance policy in 401k plan

[jkharvey]

Is it permissable to take a loan against an insurance policy that is held as a plan asset? If so, would it be treated as any other plan loan with regards to limits, repayments, default etc? Seems to me it would.

[Belgarath]

Possibly, BUT - be careful on this. First, make sure the document allows loans to be taken from assets in life insurance contracts. Many documents, even if life insurance is a permitted investment, don't allow loans from the policies themselves.

So then the plan trustee takes the policy loan, still within the plan, and transmits the proceeds to you as a PARTICIPANTloan. Technically, "you" are not taking the policy loan.