Can I Loan From My Life Insurance Policy?

If you are in need of immediate funds, then borrowing against the cash value of your policy would be the best solution available to you

. Many insurance companies give policy owners the opportunity to loan a certain amount of money from the cash value of their life insurance policy. However, before you loan from your policy it is crucial that you understand first how they work and what will be its implications to your policy.

Process

When you obtain a policy loan from a life insurance carrier, you are automatically borrowing against the cash reserve fund of your policy. In due course, your policy may increase a sizeable amount of cash value. Each time you pay premiums to the insurer, a portion of your payment goes to the death benefit and a fraction of it goes to your cash reserve. As the cash value enlarges, you also acquire a bigger chance of borrowing money from your cash value.

Which specific policies proffer it?

If you wish to borrow against your life insurance policy, ascertain that you have purchased the suitable type of policy. Whole life insurance is one of the very good examples of policy that builds up more cash value in due course. Conversely, you cannot obtain a loan if you only purchased a term life insurance since it only offers death benefits to policy holders.

How to get a loan?

If your policy has built-in cash value and you intend to borrow against your policy, you need to submit all the requisites to loan from your policy. In the beginning, you have to make certain that your insurance carrier offers loans. If they do, you can get in touch with your insurance carrier to begin with the lending process. Normally, the company will ask you to fill in a loan form and submit it to the insurance company.

Gains of borrowing against your policy

Getting a loan from your policy can offer you greater advantages than other sorts of loans available. You will obtain flexible terms if you loan against the savings of your policy. Also, failure to make payments every month will not be a problem provided that you pay it off within the fixed period of time. Another benefit that you can acquire from this variety of loan is that it does not rely on your credit score. If your policy incorporates a cash value, you should be permitted to make a loan notwithstanding your credit history.

by: Cindy McGrant

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