Can I Borrow Against My Life Insurance?
Times are tough right now, with millions of Americans losing their jobs, and unemployment rates soaring. Alongside the unemployment comes intense financial stress, and of course, the sometimes desperate need to make ends meet. Some people who need the cash are asking, “Can I borrow against my life insurance?” The answer to that question is a very qualified “yes.”
When you get a life insurance policy so that there will be some money for your spouse and children, should you die, every month that you pay your life insurance premium you are building up a small amount towards what is called the “cash value.” This amount will earn an interest rate. So, if you need to borrow against this cash value, you can. However, it’s important to mention that this should only be done in cases of absolute necessity. The cash value you accrue in your life insurance policy is going towards your beneficiaries if you die, and if you borrow from your life insurance policy and die without having repaid the loan, the money will be deducted from the amount that will go to your beneficiaries. In a very real way, borrowing against your life insurance policy could defeat the entire purpose of having life insurance, which is to make sure your beneficiaries get some financial relief and protection should you die.
To learn more about the pros and cons of borrowing against your life insurance policy, be sure to call or speak to a life insurance professional. He or she will advise you about borrowing against a life insurance plan, and what you could possibly do in lieu of it. You could also speak with a financial adviser who may be able to suggest better options.