Can You Borrow From A Term Life Insurance?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Unfortunately, you cannot borrow from a term life insurance policy because term life insurance does not have any cash value from which to borrow. Cash value is only present in permanent policies (Whole Life, Universal Life, and their variations). Not all permanent policies have enough cash value to tap into until they have been in effect for some time, and some (e.g. guaranteed universal life) may never have much cash value. If you want a policy with cash value that you can borrow from in the future, most permanent policies will have an illustration that you can review before you purchase it, so you can see who much cash value will be available.
    Answered on September 20, 2013
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  2. 14231 POINTS
    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    No because a term policy by it's nature does not build any cash value from which to borrow. Nor can it be used as collateral if you are applying for a loan for the very same reason. Talk to your Insurance Professional about the specifics of your policy and current coverage needs. It may be time to convert all or a portion of your term policy into a permanent form that will eventually include an accumulation of cash value in some form. This takes some time in most cases to build up to any sizeable amount so don't expect such funds to be available for a number of years.
    Answered on December 23, 2015
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