Can you borrow money from life insurance? Yes you can, and there are 3 popular choices to consider. There’s the policy loan, an option called an “accelerated death benefit” and a living benefit loan. Let’s take a look at each of these.
Taking out a policy loan is generally straightforward: you borrow against your life insurance policy for its cash surrender value. However, there can be problems such as higher premium payments. Also, most policies don’t have a cash surrender value, making this option unavailable to many.
Accelerated Death Benefit
The second option, the accelerated death benefit, works if you want to borrow money from your life insurance policy. In order to qualify, you must be terminally ill. How that is defined can vary according to your policy, but it is generally a 6 to 24 month life expectancy. A letter from your doctor confirming this is required.
Living Benefit Loan
A living benefit loan can also be a great solution. If you have been diagnosed with a disease that is life-limiting, such as cancer, you can receive a Living Benefit Loan for up to half of your death benefit. For example, if you have $100,000 in coverage, we can loan you up to $50,000, secured only by that life insurance policy. You keep your insurance and your beneficiaries remain as they were listed before the loan.
The Next Step
If you want to borrow money from your life insurance policy, understanding your options is the first step. The next step is to speak with an experienced counselor who can guide you through the process to borrow against life insurance.
If you think a Living Benefit Loan might be a good option for you, Life Credit Company is here to help. Please give us a call at 1-888-274-1777.