How does borrowing from my own policy work?
You take a loan from the insurance company using your policy's cash value as collateral. Your cash value can continue earning dividends and interest while the loan is outstanding, and you choose the repayment schedule. Any unpaid loan balance reduces the death benefit.
Key takeaways
- ✓The insurer lends to you, using your cash value as collateral.
- ✓There's no credit check or loan application in the usual sense.
- ✓You decide when and how to repay.
- ✓Unpaid loans and interest reduce the death benefit.
Why the cash value keeps growing
Because you're borrowing against your cash value rather than withdrawing it, the full cash value can remain in the policy. Depending on the insurer and policy, it may continue to earn guaranteed interest and any dividends declared.
Repaying with discipline
Flexible repayment is a feature, but the system works best when you repay your policy the way you'd repay a bank, often including the interest you would have paid somewhere else. We help you build that habit into your plan.
For educational purposes only. This is not tax, legal, or investment advice. Policy performance, dividends, and loan terms vary by insurer and are not guaranteed except as stated in the contract.