Can I Borrow From My Life Insurance?

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    David RacichPRO
    Fountain Hills, Arizona
    Assuming you have a permanent cash value policy, you may borrow money if it’s available. There may be policy surrender charges that reduce the amount you can borrow. Cash value accumulation is also based on the performance of the crediting method of the policy: dividends, interest rates, indices or separate subaccounts (which can include debiting, i.e. account losses.) Keep in mind that borrowing from your policy may have loan charges: zero net cost loans, wash loans, spread loans, direct recognition loans and participating loans.  
     
    Answered on July 9, 2013
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    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    Talk to your Insurance Professional about your particular policy, but if you have a form of permanent Life Insurance that is developing cash accumulation, then more than likely you would be able to borrow some of the available cash. In most cases, a nominal interest rate will be applied to the outstanding loan balance until it is paid back. However, there is no particular requirement to pay back the loan. Understand however that if the loan and accumulating interest is still outstanding at the time of your death, that amount will be deducted from the payable death benefit and your beneficiary will receive a reduced amount accordingly.
    Answered on March 3, 2015
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