Permanent life insurance, such as whole life, universal life and variable life, acts as a forced savings account, since you can borrow against part of the premium paid. When you borrow money from a whole life policy but don't repay it in full before the insured dies, the company will subtract the balance due from the death benefit provided to the beneficiary.
Step 1
Review your current life insurance policy, paying close attention to whether it is a permanent life policy or a term life policy. Permanent life insurance builds up a cash value that you can borrow against for a variety of reasons, including paying household bills and funding a child's college education. Term life insurance does not build up a cash value, so you can't borrow against it.
Step 2
Determine how much you need to borrow and how much is available. Your original policy should include an illustration that lists the cash value at the attained age of the insured.
Step 3
Contact the agent who issued the policy, or the underwriting company, and request a loan form. You must complete the loan form and have it notarized before the company will review your request.
Step 4
Call the insurance company to follow up if you don't hear from the company within two weeks.
Tips and Warnings
- Loans against permanent life insurance policies are normally processed quickly and with less hassle than standard loans, since the borrower is borrowing against his own money.
Things You'll Need
- Loan form
Member Comments