Loan Provisions: Index Universal Life Insurance vs. 401(k) The ability to borrow from a financial plan is another major factor in the IUL vs. 401(k) debate. A 401(k) allows loans, but repayment is required with interest, and failure to repay can result in taxes and penalties. On the other hand, an IUL allows policyholders to take tax-free loans from their cash value without mandatory... https://www.federalpensionadvisors.com/post/iul-vs-401k