On a whole life insurance policy, what happens if the outstanding loans plus interest due exceed the policy loan value?

 The insurer will provide you with at least 30 days 'prior notice' before terminating your policy. During that 30 day period you have the opportunity to repay the outstanding loan and/or interest in order to avoid lapse.

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Life Insurance Resource Center
Comprehensive information about life insurance from the Insurance Department's Life Insurance Resouce Center
URL: http://www.dfs.ny.gov/insurance/clife.htm