What happens if you borrow money from a life insurance policy?

Keep in mind, the insurance company will charge interest on the policy loan. If you borrow money from your life insurance policy, you are borrowing your own money. It is essentially an advance of money that could be received from the policy either through a surrender of the policy or the payment of the death benefit.

Can I borrow against a term life insurance policy?

You can borrow from permanent life insurance policies that build cash value. These would typically include whole life and universal life (UL) policies. You cannot borrow against a term policy since there is no cash value associated with it. Can I Borrow Against a Term Life Policy?

How much can you borrow against a life insurance policy?

Each insurance company will have different rules in place, but in general, the most you can borrow against your life insurance is up to 90% of its cash value. How Soon Can You Borrow Against a Life Insurance Policy? You can borrow from a life insurance policy as soon as there is enough cash value built up to take a loan in the amount you need.

Can you borrow money from a permanent life insurance policy?

Most permanent life insurance policies offer the opportunity to borrow money from the cash value. Permanent life insurance (including whole life, universal life and variable life) is designed to provide coverage for your lifetime. Permanent life policies build cash value as you pay the premiums.