Can I Borrow On My Life Insurance?
21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasGreat question! You can borrow from your policy if it has built up enough cash value. This typically takes a few years to start building a borrowable amount. The first couple of years repays the costs of the policy, and than it will start generating cash. The amount that you borrow will be charged interest, and if the loan balance becomes too large, it may cause the cancellation of your policy. Contact your agent to determine your cash value, and borrowable amount available to you. Thanks for asking!Answered on May 7, 2014flag this answer
10968 POINTSview profileTim WilhoitOwner, Your Friend 4 Life, Brentwood TNFirst it depends on the type of policy you have. If it is a term policy then the answer is no. If it is a cash value policy i.e. whole life, universal life, indexed universal life, then the answer should be yes over time. Most cash value policies take 5 to 7 years to build a cash value because of cost of insurance that must be covered in those first years. To borrow, you need to stay on a percentage basis that will not allow the policy to lapse and cancel unless you intend to repay the loan in a short time period. I recommend having your agent or insurance company run some illustrations of different amounts to keep your policy in force. Otherwise you are actually defeating your own purpose for the plan.Answered on May 7, 2014flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaA permanent life insurance policy (most commonly “whole life”) develops cash values to enable the policy to provide a level death benefit for a level premium for the whole life. The company will allow you to borrow against those cash values. They are guaranteed in the contract. The loan does not require anything except your request. You need not complete an application. The loan need not be repaid in any scheduled way. At death the loan will be repaid which will reduce the death benefit by that amount. There are permanent policies where the cash value is not guaranteed. These are most commonly called “universal life” or “variable life” policies. While similar provisions apply there is possibility that a loan will exhaust the value of the policy in which case the policy will lapse.Answered on May 7, 2014flag this answer
14231 POINTSview profileTom SheehanAgency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482If you have some form of Permanent Life Insurance such as traditional Whole Life, come form of Universal Life or a Variable Life product to name a few examples, then these are products that not only provide a death benefit when you die, but also build cash value so long as you live and pay the premium. If you have a form of permanent coverage then, you may depending on the specific terms and conditions of your policy, be able to borrow from that accumulated cash. Remember a couple of key things about this. The Insurance Company will begin to charge interest on the amount borrowed so paying it back sooner rather than later protects the integrity of the plan much better. Further, if you die with an outstanding loan balance, the balance will be subtracted from the death benefit paid to your beneficiary.Answered on May 7, 2014flag this answer
4249 POINTSview profileGary LanePresident, Lane Independent Agency, Southern CaliforniaThis is a major reason people choose Whole Life over Term. You cannot borrow against Term Life Insurance. It builds no cash value and ends at the end of the stated term. With Whole Life, you build cash value, which accumulates over time and never changes its premium. If you need the cash, for any reason, you can borrow against it, with a small interest charge, and, if you choose, never pay it back. The amount then is taken from the Death Benefit. There is no income tax payable for the money you take out of your policy for this loan. Thank you. GARY LANE.Answered on May 7, 2014flag this answer
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