Loans treated as distributions
If, during any taxable year, an individual—
(i)#
receives (directly or indirectly) any amount as a loan under any contract to which this subsection applies, or
(ii)#
assigns or pledges (or agrees to assign or pledge) any portion of the value of any such contract,
such amount or portion shall be treated as received under the contract as an amount not received as an annuity. The preceding sentence shall not apply for purposes of determining investment in the contract, except that the investment in the contract shall be increased by any amount included in gross income by reason of the amount treated as received under the preceding sentence.