How Can I Borrow Money From My Life Insurance Policy?

If you have a life insurance policy, you may be wondering if there’s a way to access the cash value accumulated over time. Fortunately, many life insurance policies offer a borrowing option that allows policyholders to borrow money from the policy’s cash value. In this article, we’ll explore how you can borrow money from your life insurance policy and what you need to know about the process.

Understanding Borrowing Against Life Insurance

Before diving into the details, it’s important to understand that each insurance company has its own set of rules and guidelines regarding borrowing against a life insurance policy. However, there are some general principles that apply to most policies.

When you purchase a life insurance policy, a portion of your premium payments goes towards building the policy’s cash value. This cash value grows over time and can be used as collateral for borrowing. The specific amount you can borrow will depend on the terms of your policy and the available cash value.

How Much Can You Borrow?

As mentioned earlier, each insurance company will have different rules in place. However, in general, the most you can borrow against your life insurance policy is up to 90% of its cash value. It’s important to note that borrowing against your policy reduces the death benefit, and any unpaid loan balance may be deducted from the death benefit if you pass away before repaying the loan.

The Borrowing Process

If you’re considering borrowing from your life insurance policy, here’s a general overview of the borrowing process:

1. Review your policy

First, review your policy documents or contact your insurance company to understand the specific borrowing provisions and any associated fees or interest rates.

2. Determine the cash value

Find out the current cash value of your policy. This information can typically be obtained from your insurance company.

3. Submit a loan request

Contact your insurance company or agent to initiate the loan request. They will provide you with the necessary forms and guide you through the application process.

4. Loan approval and terms

Your insurance company will evaluate your loan request based on the available cash value and other policy factors. If approved, you’ll receive the loan proceeds along with details about repayment terms, interest rates, and any applicable fees.

5. Repay the loan

Make regular loan repayments to the insurance company according to the agreed-upon terms. Keep in mind that unpaid loans may accumulate interest over time, so it’s important to stay on top of the repayments.


Borrowing money from your life insurance policy can be a useful option when you need access to funds. However, it’s important to carefully consider the terms, potential impact on the death benefit, and repayment obligations. Before making any decisions, review your policy details, consult with your insurance company or agent, and ensure that borrowing against your life insurance aligns with your financial goals and needs.