Can You Borrow Against A Term Life Insurance?

1. 

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   Jerry Vanderzanden, CLU, ChFC

   Co-Founder, Coastal Financial Partners Group, California

   There are two basic types of life insurance: term and permanent (cash value).  Term is purchased to provide protection for a finite period of time for temporary needs of up to 30 years. Term does not usually have a cash value associated with it so there is nothing available to borrow.

   Answered on May 22, 2013

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2. 

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   Peggy Mace

   Most of the U.S.

   There is no cash value in a Term life insurance policy to borrow against. However, some Term life insurance has "living benefits" that allow the insured person to take  part of the face amount in cash in case of critical or chronic illness. Others have built in riders that allow the insured person to take part of the face amount in cash if diagnosed as terminally ill. This is not borrowing from the policy; this is giving up that amount of the death benefit in order to use it while still alive. But it is one way that a person can get cash from a Term policy.

   Answered on May 22, 2013

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