How to Borrow from a Whole Life Insurance Policy

Life is full of surprises–good and bad. If you’ve got a whole life insurance policy, you may be able to use it to your advantage when a big surprise arises. Let’s say you have the opportunity to buy the home you’ve always wanted and at a great price. The only downside is you’re just a little short. Luckily you’ve got a whole life policy and may be able to borrow the amount you need. The only question is how?

To Start

The first thing you are going to need to do is find out exactly how much money you need to borrow. If you are using the money to pay a bill or something of that nature, the amount you need will be exact–making this is a fairly simple step. However, if you are going to use the money to fund a venture, where the exact amount you are going to need may vary, you might want to consider getting a little more than you think you are going to need just to be on the safe side.

Cash Value

Now that you have determined the amount you are going to need to borrow, it is important that you take a look at your policy to make sure you will be able to borrow the correct amount. When borrowing from a whole life policy, you must realize that only a portion of the money you put into the policy builds cash value while the rest of it goes towards your death benefit. Now that you’ve taken a look at your policy and you know how much you are going to need to borrow, you should contact your insurance company. You are going to have to fill out paperwork and return it to the company before they can review your request. Nevertheless, it is a good idea to have a talk with your agent to learn more about borrowing from your policy. In emergency situations, you may not have a choice as to whether or not you borrow the money, but either way you should still be well informed on what you are doing and what the after effects may be on your policy.

Repaying Your Loan

Once you have received your check, it is usually up to you whether you would like to pay the loan back or not. Since the money you borrowed was technically your money, you most likely won’t be required to pay it back. If you decide not to pay back, the amount you borrow will be deducted from the money paid out in the event of your death and will basically be considered a withdrawal. When deciding whether or not to pay the loan back, you must keep your family in mind. The whole point of getting a life insurance policy is to make sure that your family is taken care of when you die, and deducting money from your death benefit may put them in a difficult situation. So make sure that you think this over before you decide what to do.

Guest post from Payton Price. Payton writes about term life insurance for


One thought on “How to Borrow from a Whole Life Insurance Policy

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