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You can borrow against a whole life policy, which typically has a guaranteed cash value. This amount starts slowly (on most policies) and gradually increases each year. Additional dividends may be paid on a participating policy and they can also be borrowed or withdrawn.
There will be specified interest rate charged to your loan amount. Because of the complexity of withdrawing cash from a contract, it is always best to consult an experienced broker or a CPA to ensure you are making a wise decision.
You can borrow against any life insurance policy that has a cash value built up in it. This can be Whole Life, Universal Life, or Indexed Universal Life (IUL). Some people use IUL by putting a large amount of money into the policy while they are younger, then borrowing from their policy when they are older for an income stream during retirement.
Only permanent cash value life insurance policies have cash values. Borrowing policy loans have interest charges associated with them from zero net cost loans to direct recognition loans. And keep in mind that policy loans are only free in a modified endowment contract that is kept in force for the life of the insured. Another option of accessing cash values may be withdrawing basis or contributions, but the force out rule governs the first 15 years of a permanent life insurance policy and may be subject to a taxable event. Before moving forward with any of these ideas consult your tax adviser.
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There will be specified interest rate charged to your loan amount. Because of the complexity of withdrawing cash from a contract, it is always best to consult an experienced broker or a CPA to ensure you are making a wise decision.