In Pennsylvania life insurance policies that build cash value,policy loansallow the policyowner to access accumulated cash valuewithout surrendering or terminating the policy. Once sufficient cash value exists, the policyowner may borrow against it at the interest rate specified in the policy.

Policy loans are not taxable as income while the policy remains in force. If the loan is not repaid, the outstanding balance plus accrued interest is deducted from the death benefit payable to the beneficiary. This feature provides liquidity while preserving coverage.

The other options do not provide direct access to cash value without altering the policy. A spendthrift clause protects proceeds from creditors, reduced paid-up insurance changes the policy’s face amount, and fixed-period installments are settlement options payable after death. Therefore,policy loansis the correct and verified answer under Pennsylvania Life Insurance regulations.