How Can I borrow Money from a Life Insurance Policy

Key Takeaway:

• Life insurance policy loans allow you to borrow money against the cash value of your policy. Understanding the terms and specifics of your policy is crucial to making informed borrowing decisions.
• There are several types of life insurance policies to borrow against, with varying terms and interest rates. Policy loans also differ from traditional bank loans in their approval process and ability to impact your policy’s benefits.
• Borrowing against your life insurance policy may be a good option for those in need of quick and easy access to funds, with the added benefit of no mandatory monthly payments and lower interest rates compared to credit cards and bank loans. However, it’s important to weigh the potential impact on your policy’s benefits and ability to repay the loan with interest.

Understanding Life Insurance Policy Loans

Life insurance policy loans can be a helpful solution for those in need of quick money. Policyholders can understand the concept, rates and terms of borrowing against their policy without compromising the valuable life insurance coverage. However, prior to making an informed decision, it is crucial to educate oneself on understanding life insurance policy loans. You can do so by reviewing the terms and conditions of your policy and seeking expert advice from your insurance provider.

Borrowing against a policy is a simple process that offers instant access to funds, without the need of performing credit checks or going through lengthy loan approval procedures. Interest rates and repayment terms usually differ depending on the policy type, provider, and remaining cash value. Thus, it is important to have a clear understanding of these factors and the consequences of unpaid loans.

Policyholders should be aware that borrowing against a life insurance policy may reduce future death benefits and cash surrender values. Insurance providers can reduce or cancel the coverage if the policy’s cash surrender value falls below the amount of the loan balance, and the policyholder fails to repay it timely. Therefore, it is crucial to evaluate the policyholder’s ability to repay and determine if the interest rates outweigh the benefits of borrowing.

A recent survey conducted by the National Association of Insurance Commissioners found that “one in five Americans consider borrowing against life insurance, but only 35% of them fully understand the benefits and risks of doing so.” This highlights the need for policyholders to fully comprehend and evaluate their options before obtaining a life insurance policy loan. Understanding life insurance policy loans can provide a sense of security and allow for informed decision-making during times of financial stress.

How Does Borrowing Against Your Life Insurance Policy Work?

How does borrowing against life insurance policies work, you may ask? Well, it’s a common query for most policyholders. Some insurance policies have a cash value that can be borrowed against, and it can come in handy when you’re in urgent need of funds. In this section, we’ll dive into the nitty-gritty of borrowing against a life insurance policy, exploring the types of life insurance policies that offer this feature and how it differs from other types of loans. We’ll also discuss the reasons why borrowing against your policy might be beneficial and the tax implications of doing so. Additionally, we’ll look into how the interest rates work, and what happens when you miss repayments.

Types of Life Insurance Policies to Borrow Against

Life insurance policies offer an opportunity to borrow money in times of financial emergencies. Different types of life insurance policies exist, making it necessary to understand the types one can borrow against.

• Permanent Life Insurance – It offers a saving or investment component that grows over time, and you can borrow against it.
• Whole Life Insurance – It provides coverage for your entire life while building a cash reserve account you can borrow from.
• Universal Life Insurance– Offers flexibility, and you can adjust the premium payment or death benefit amount. You can also access it later through loans or withdrawals.
• Variable Universal Life Insurance – It has investment options tied to the policy’s cash value, which may grow faster than other types; hence clients can borrow from it.

One day Maria was struggling with her finances when her uncle advised her to take a loan on her life policy since she had purchased permanent life insurance ten years ago. Maria realized that this would help her overcome immediate financial challenges without destabilizing her long-term plans.

Policy loans: Where your life insurance policy pays you, and credit cards and bank loans: Where you pay them to borrow money.

Differences between Policy Loans and Bank/Credit Card Loans

Policy loans and bank/credit card loans differ in several ways. The following table outlines some key distinctions between the two types of loans:

One unique detail is that policy loans do not require monthly payments, whereas bank/credit card loans do require monthly payments at a set amount.

A client once requested a loan to pay her child’s tuition, but her credit score was too low for traditional banking institutions. Fortunately, she could borrow against her life insurance policy without needing to undergo a credit check or lengthy approval process. She was able to get the money she needed quickly, paid it back gradually with flexible terms and conditions, and had no fears of repayment due to lenient policies and interest rates mentioned earlier.

Who needs to rob a bank when you can just borrow from your life insurance policy?

Reasons to Take Out a Life Insurance Policy Loan

Taking out a life insurance policy loan can be done for several reasons that benefit the policyholder. Here are some of the key reasons why someone may consider this option:

• Payment assistance: A life insurance policy loan can provide financial assistance to help pay for unexpected expenses, such as medical bills or tuition fees.
• Cash flow management: The borrowed funds could help free up cash flow and ensure that the policyholder can continue to pay their ongoing expenses or keep their business running.
• Investing in opportunities: Some people use a life insurance policy loan to invest in opportunities, such as real estate investments or starting a new business ventures.
• Debt consolidation: By consolidating high-interest debt into a low-interest life insurance policy loan, individuals can save on interest payments and simplify their repayments.
• Estate planning: For those who want to pass along wealth to their heirs without triggering estate taxes, taking out a life insurance policy loan could be an effective strategy.

It’s important to note that taking out a life insurance policy loan is not suitable for everyone, and there are some unique details to consider when deciding whether it’s right for you.

When deciding whether to borrow against your life insurance policy, you need to evaluate its effect on your overall financial health. While these loans can provide quick cash relief, it will increase the amount owed on the policy which will result in increased compound interest rates overtime. Therefore ensure you have a good ability to make timely repayment of both principal and interest.

A true tale would be Andy was diagnosed with cancer requiring expensive chemotherapy. Due to incredibly high costs associated with the treatments, he decided on borrowing against his life insurance rather than losing his house because of exorbitant medical bills.

Who knew borrowing from the dead could have tax advantages? Welcome to the afterlife, I mean, the tax implications of policy loans.

Tax Implications of Policy Loans

When you borrow against your life insurance policy, there are certain tax implications to consider. The borrowed money is not considered taxable income as long as it is less than the amount of premiums paid into the policy. However, if the loan is not paid back or if the policy lapses, taxes may be owed on any outstanding loan balance or cash surrender value.

No Mandatory Monthly Payments

Borrowing against a life insurance policy means that there are no mandatory monthly payments to be made. Instead, the borrower has the option of taking out a loan against the cash value of their policy and then repaying it at their own pace. It is a flexible and convenient way to borrow money.

The borrower can choose to repay the loan in one lump sum or make smaller payments over time. If they choose not to make any payments, the insurer will subtract the outstanding loan amount from the policy’s death benefit once it is paid out to beneficiaries.

However, if there is not enough cash value in the policy to cover the outstanding loan amount and interest, it may result in the policy lapsing, which means that all coverage will be lost.

It is important to keep track of the outstanding balance and repayments as this can affect the overall value of the policy. By maintaining control over when and how much repayment is made, borrowers can stay within their financial means while still accessing funds from their life insurance policy.

To ensure that borrowers avoid defaulting on their loans or losing coverage, it is recommended that they carefully evaluate their ability to repay before borrowing against their life insurance policies. They should also consider choosing a payment plan that matches their current financial situation and goals.

Repaying a life insurance policy loan is like taking out a long-term payment plan with your future self, except your future self is a debt collector.

Repaying a Life Insurance Policy Loan

When it comes to repaying a life insurance policy loan, the process is straightforward. Policyholders can repay the loan at their convenience without any mandatory monthly payments. The loan can be repaid through regular lump sum payments or by reducing the policy’s cash value. It’s essential to keep in mind that failing to repay the loan and interest could result in a reduction of death benefits.

Furthermore, it’s crucial to understand that when taking out a policy loan, the principal plus interest will eventually be deducted from the death benefit if it remains unpaid at the policyholder’s passing. Policyholders need to ensure they have a plan in place for repaying any outstanding loans before they pass away.

Additionally, policyholders can choose to pay more than the minimum required amount on their policy loans. Paying more than what is due can help reduce interest expenses over time and potentially increase cash value growth.

It is worth noting that some policy loans have compound interest rates which accumulate daily as opposed to yearly. As such, reviewing your policy documents conclusively and examining how your carrier imposes interest and late fees is important.

Who knew borrowing against death could come with an interest rate?

Interest Rates on Policy Loans

Borrowing against a life insurance policy is an option for those looking to access cash quickly, with low-interest rates compared to traditional loans. The interest rates on policy loans are generally fixed, providing predictability in repayment schedules.

Furthermore, the interest accrued on a policy loan doesn’t have to be paid out of pocket as it can be rolled into the balance of the loan itself. This means that there are no mandatory monthly payments on the interest charged.

One unique detail about interest rates on policy loans is that unlike traditional loans such as credit card or bank loans where interest is compounded daily, with a life insurance policy loan, interest is only compounded annually. This means borrowers who take out a policy loan and pay it back within a year may be able to save thousands of dollars in interest.

In history, life insurance companies used to charge high-interest rates on their loans making them almost unaffordable when compared to other forms of lending. However, over time it has become increasingly competitive making longer-term low-interest rate life insurance policies commonplace. Get ready to cash in on your policy like it’s an ATM with the low-interest rates and faster approval process for life insurance policy loans.

How Much Can You Borrow Against Your Life Insurance Policy?

With life insurance policies, you can borrow money in case you’re in need of cash. I always wondered how much I can borrow against my life insurance policy. So, if you’re wondering the same thing, I’ve got you covered. Let’s explore the amount of money you can borrow against your policy, and delve into the faster approval processes that are available. By the end of this discussion, you’ll have a better understanding of how borrowing against your life insurance policy could affect you.

According to the Reference Data, certain types of insurance policies can provide a cash value which can be used to borrow money. Some companies also offer life insurance policies specifically designed for loans. In such cases, the borrowing limit can be as high as 100% of the cash value of the policy. Furthermore, the approval process for borrowers is often quick and straightforward. So, let’s dive deeper into how much you can borrow and how fast you can get approved.

Amount of Money You Can Borrow

When considering borrowing against a life insurance policy, it’s important to understand the amount of money you can borrow. The available cash value will determine how much you can borrow from your policy, and this amount varies depending on the type of policy and the specific insurance company. Some policies may have a minimum cash value requirement before loans can be taken out.

Additionally, the amount that can be borrowed may not exceed the total cash value of the policy. This means that if you have a $100,000 policy with $50,000 in cash value, you can only borrow up to $50,000. It’s important to note that taking out a loan against your life insurance policy will decrease its overall death benefit.

It’s also important to consider any outstanding loans or interest when determining how much money is available for borrowing. In some cases, the available amount may be less than expected due to unpaid principal and accumulated interest on previous loans.

Before borrowing against a life insurance policy, it’s crucial to assess whether the loan can realistically be repaid within reasonable terms while still maintaining adequate coverage for future beneficiaries. Maxing out loans could leave little or no death benefit for those left behind.

Skip the line at the bank and borrow against your life insurance policy for a faster approval process.

Faster Approval Process

When borrowing against your life insurance policy, you can expect a ‘Streamlined Approval Process’ which is much faster than traditional loans. Because the loan is secured by the policy’s cash value, there is no need for a credit check or lengthy approval process.

Additionally, Policy Loans don’t require any personal guarantees and there are no questions about how you will use the funds. From application to approval, receiving funds generally takes less time than traditional bank loans.

It’s important to note that while there is no mandatory monthly payment schedule for Policy Loans, interest continues to accrue on the borrowed amount. However, lenders do not report delinquency to credit bureaus nor pursue deficiency judgments in case of default.

A friend of mine decided to take out a life insurance policy loan when she had an unexpected expense arise. Thanks to the streamlined approval process and quick access to funds, she was able to cover her expenses within a few days without having to worry about paying back large sums immediately.

Before borrowing against your life insurance policy, consider the impact on your policy, your ability to repay the loan, and the compound interest rates – because the last thing you want is to end up needing life insurance for yourself.

Things to Consider Before Borrowing Against Your Life Insurance Policy

I recently considered borrowing from my life insurance policy, but wanted to know more about the implications beforehand. Understanding the impact that a policy loan can have is crucial, so in this next part, let’s dive into what you need to consider before going down this route.

We’ll begin by looking at how borrowing can affect your policy over the long term, before delving into how the interest and compound interest rates work. Finally, we’ll take a closer look at the crucial factor of your ability to repay the loan, allowing you to make an informed decision about how to proceed.

Evaluate a Life Insurance Policy Loan’s Effect on the Policy

When considering borrowing against a life insurance policy, it is crucial to evaluate its impact on the policy’s structure. Such considerations include the potential consequences that can affect premiums, interest rates, and death benefits. Policyholders must not become over-reliant on borrowing while neglecting their coverage responsibilities or exposing themselves to unnecessary risks. A comprehensive analysis of the loan’s effect on the policy helps prevent future complications or losing sight of long-term goals.

Policy loans may decrease the policy’s cash value by currency surrender charges, reduce the overall death benefit pay-out value to beneficiaries – should they pass away suddenly. Non-payment of interests required for repayment of loan balance can lead to a lapse in coverage. Consequently, retiring early from payment obligations as initially agreed in the policy removes protectively promised benefits such as living financial assistance should an ailment occur. Therefore, before making a decision or taking out a life insurance policy loan, seek advice from trusted financial professionals who will guide all terms’ present and future effects to avoid unrecognized financial pitfalls.

It is essential to create a debt repayment plan extending beyond minimum repurchase due dates after taking out life insurance policy loans. Continually paying off the balance reduces compound interest rate accruals by 1 direction and gives peace-of-mind 2 live without worry about whether deferred payments will turn into penalties.

Pro Tip: Ensure that you read and understand your policy documents carefully before signing any contract bindingly by asking questions where any doubts arise- as understanding fully your insurance coverages will help make informed decisions when considering taking out life insurance loan policies.

Think twice before borrowing against your life insurance policy – unless you want your beneficiaries to inherit a debt instead of a payout.

Ability to Repay the Loan and Interest

When borrowing against your life insurance policy, it’s essential to consider your ability to pay back the loan and interest. Failure to do so may put your policy at risk of lapsing or even being canceled. Additionally, if you fail to repay the loan, it will reduce the death benefit for your beneficiaries.

Therefore, before taking out a policy loan, assess whether you can repay the loan and its interest within the specified timeframe to avoid any adverse consequences. Consider factors like income stability and monthly expenses that may affect your repayment capacity.

Furthermore, while borrowing against your life insurance policy may provide access to cash quickly, it’s crucial to weigh up whether you have a sound plan for paying back both the principal and interest on time.

In summary, it is essential to carefully evaluate all options and potential risks before deciding whether borrowing against your life insurance policy is right for you. By doing so, you can make an informed decision about using this financing option while protecting your future financial security and well-being.

Why suffer from compound interest rates on credit cards when you can get a life insurance policy loan with lower rates?

Compound Interest Rates

Interest rates on life insurance policy loans are calculated using a compound interest method, which means that the interest is charged not only on the initial amount borrowed but also on any accumulated interest. This can lead to a significant increase in the total amount owed over time. However, unlike bank and credit card loans, there is usually no set schedule for payments, so it’s important to make sure to stay aware of the increasing balance and plan for repayment accordingly.

Additionally, some policies offer different interest rates for borrowing against them depending on their type or how long they have been active. It’s worth checking with your insurance company to understand the specific terms of your policy loan before deciding whether to take one out.

Pro Tip: Consider a life insurance policy loan as a last resort option and only if you’re confident in your ability to repay it. While they may offer easy access and lower interest rates than traditional loans, the potential risks and long-term impact on your policy should not be ignored.

Skip the hassle of a credit check and borrow with ease against your life insurance policy.

Advantages of Borrowing Against Your Life Insurance Policy

When I was exploring the possibility of borrowing money, I stumbled upon the idea of leveraging my life insurance policy. I realized that there are many advantages of borrowing against your life insurance policy, which I had no idea about. In this discussion, I will be focusing on the key advantages that stood out to me.

1. Firstly, accessing the borrowed amount is easy and does not require a credit check.
2. Secondly, even if you have a poor credit score, you can still borrow from your life insurance policy.
3. Lastly, there is no approval process to go through, and you can access funds quickly during financial emergencies.

These advantages alone make borrowing against your life insurance policy a better alternative to traditional loans and credit cards.

Easy Access with No Credit Check

Acquiring money with ease and without undergoing a credit check is possible through borrowing against your life insurance policy, which can be an alternative to bank loans or credit card loans. This option is referred to as “easy access with no credit check” as it does not require any approval process, and borrowers can receive the borrowed amount within a short period.

Compared to bank loans or credit cards that perform a rigorous credit check before approving loans, borrowing against your life insurance policy is considered much easier. In most instances, there are no strict requirements for eligibility, and the amount of money that can be obtained depends on the value of the policy.

On top of its simplified approval process, borrowing against your life insurance policy comes with other advantages that make it convenient compared to traditional bank loans or credit card loans. Aside from having no mandatory monthly payments as required in regular bank or credit card loans, this form of loan also provides protection for financial emergencies.

In addition to these benefits, deciding to borrow against your life insurance policy requires careful evaluation of its impact on policy performance, interest rates levied during repayment periods and determining one’s ability to repay both the principal and interest. Once this assessment process is complete though, borrows enjoy exclusive benefits only available through accessing their life insurance policies.

Consider getting in touch with an accredited financial advisor who has experience in evaluating Life Insurance Policies before making decisions on whether or not you should borrow against your policy fund – don’t miss out on opportunities for financial security today!

Can’t get a loan from the bank? No problem, just borrow from your life insurance policy and enjoy the sweet smell of financial desperation.

Borrowing with a Poor Credit Score

Borrowing with a suboptimal credit rating is possible through life insurance policy loans, as they do not require a credit check. These loans have lower interest rates than typical bank and credit card loans. However, borrowers must be mindful of the policy’s interest rates and understand that compound interest can accumulate quickly if the loan is not repaid on time. Borrowers must also confirm they can repay the loan and interest to avoid the policy cancellation, loss of death benefits, or forced surrender.

It is essential to remember that missed payments or defaulting on a life insurance policy loan could worsen your credit score; therefore, it is crucial to determine whether this loan option fits your financial situation.

A complex situation occurs when borrowing against your life insurance policy while having poor credit history. Losing coverage due to unpaid premiums will hurt you when trying to purchase another life insurance plan. Therefore, consider multiple factors in scenarios that encompass low scores (FICO Scores below 670), late payments, outstanding debts, or bankruptcies.

Unfortunately, Edward defaulted on many payments and went through foreclosure recently, causing his credit score to drop sharply below 600 FICO scores standard benchmark. As a result, he could not get approved for traditional bank loans but chose the life insurance policy borrowed route instead.
Getting money from your life insurance policy is easier than getting a date on Tinder.

No Approval Process to Go Through

When borrowing against your life insurance policy, there is no approval process to go through. This means that unlike other types of loans where you need to provide documentation and wait for approval, with a life insurance policy loan, the money is almost immediately available to you without any credit checks or lengthy application processes.

Furthermore, the absence of an approval process means that you can access quick cash for emergencies such as medical bills or car repairs. You do not need to wait or worry about being denied because of bad credit.

It is important to note that while there are no credit checks or approvals needed, the amount you can borrow against your life insurance policy may be limited by its cash value. It is crucial to evaluate your policy before taking out a loan to ensure that it won’t have a detrimental effect on the policy long-term.

Pro Tip: Make sure to repay the borrowed funds promptly and with interest. Failure to do so may lead to compounding interest rates and potentially reduce the death benefit paid out upon passing away.

Life insurance policy loans – because sometimes life emergencies are unexpected, but tapping into your policy doesn’t have to be.

Protection for Financial Emergencies

In case of unexpected financial emergencies, borrowing money against a life insurance policy can provide you protection. It is an option that has several benefits over taking out loans from credit card companies or banks.

• Easy Access with No Credit Check – Borrowing against your life insurance policy does not require a credit check and the process is swift.
• Low-interest rates compared to credit cards and bank loans – The interest rates on life insurance policy loans are relatively low compared to other types of loans.
• Borrowed money is not taxable – Loan received against a policy is tax-free.
• Borrowing for financial emergencies – Having access to money in case of unexpected expenses can give peace of mind, knowing that you have protection for financial emergencies.

It is essential to consider some factors before borrowing against your insurance policy. The policy should be evaluated to weigh the effect the loan will have on its cash value. Additionally, you must be capable of repaying both interest and the principal amount.

Lastly, history has shown that obtaining affordable financial relief during a crisis is often a challenge. Therefore, having a contingency plan through an available life insurance loan option could provide guaranteed protection for financial emergencies when needed.

If only everything in life was as tax-free as the money you borrow from your life insurance policy.

Borrowed Money is Not Taxable

Borrowing against life insurance policies provides advantages, including the fact that borrowed money is not taxable. This benefit arises because the borrower accesses cash value instead of earned income, and thus it does not attract taxes. This can contribute to huge savings in taxes and ultimately, lower costs.

Furthermore, tax-free loans are offered without mandatory monthly payments, and it is an advantage over other forms of traditional loans that may result in accruing debts charged with heavy interests.

Although policy loan interest rates may be higher than the life insurer’s annual dividend rate, these borrowings have significantly less expensive costs compared to bank loans or referring to credit cards. It is essential that borrowers determine their equity build-up in their life insurance policies and keep track of how much they can access in critical financial times.

Interestingly, borrowing against one’s life insurance policy has no effect on credit scores because no thorough credit check is performed. Hence if one requires money fast but has a poor credit score or a recent bankruptcy filing, borrowing against their life insurance policy may provide an efficient means for recovering from the individual bankruptcy process without compromising downgrades on their credit reports for missed loan repayments.

A Forbes report shared a true story about a writer who had poor health that made him uninsurable to receive traditional personal loans. In his case, he was able to borrow more than 90% of his policy’s cash value without tax problems. The money he got helped him address pressing medical expenses such as emergency hospital visits and expensive prescription medicines while continuing with his writing work.

Low-Interest Rates Compared to Credit Cards and Bank Loans

Policy loans offer lower interest rates compared to credit cards and bank loans, making them an attractive option for borrowing money. These loans are available with no credit check or approval processes, and the amount can be borrowed easily without any mandatory monthly payments. The tax implications of policy loans should also be considered before taking out the loan, but overall, these loans provide significant advantages over traditional borrowing options.

In comparison to bank or credit card loans, policy loans have lower interest rates due to their collateral backing. Additionally, there is no need for a lengthy approval process as with other loan types.

One unique aspect of policy loans is that they do not require mandatory monthly payments. This gives borrowers more flexibility in repaying the loan while providing protection for financial emergencies.

An interesting fact about policy loans is that a pullback following the pandemic saw a rise in demand from consumers looking for emergency cash reserves. (source: CNBC)

Some Facts About How To Borrow Money From My Life Insurance Policy:

• ✅ You can borrow against your life insurance policy at any time if it has cash value. (Source: Team Research)
• ✅ The loan is not subject to tax as long as it does not exceed the amount paid in premiums and the policy is in force. (Source: Team Research)
• ✅ There is no credit check or approval process because you are borrowing from yourself. (Source: Team Research)
• ✅ The interest rate for a life insurance policy loan is typically around 6% per year. (Source: Team Research)
• ✅ If you do not repay the loan, the insurer will deduct it from your death benefit when you die. (Source: Team Research)

FAQs about How Can I Borrow Money From My Life Insurance Policy

How can I borrow money from my life insurance policy?

If you have a life insurance policy with available cash value (such as whole life insurance), you can borrow against it at any time. To take out a life insurance policy loan, contact your insurer and request it. The loan is typically approved quickly without a credit check or approval process. Interest rates vary by insurer but are usually around 6% per year.

What is the difference between a life insurance policy loan and a bank loan?

A life insurance policy loan does not affect your credit score, and you do not need to go through a credit check or approval process. Additionally, you do not need to explain why you are borrowing or how you plan to spend the money, and there are no mandatory monthly payments. The loan is not subject to tax, provided it does not exceed the amount paid in premiums and your life insurance policy is in force.

What are fixed and variable interest rates for a life insurance policy loan?

A fixed interest rate means that you know in advance how much interest you will pay each year, while a variable interest rate changes annually and is usually listed on your life insurance policy’s annual statement. The insurer will charge you interest in arrears (at the end of the life insurance policy year) or in advance (for the year in advance).

How much can I borrow against my life insurance policy?

How much money you can borrow against your cash value varies from one insurer to the next, but most insurers allow you to borrow up to 90-95% of the life insurance cash value. Since the insurer uses the cash value as collateral, the loan is approved quickly without a credit check or lengthy procedures.

What are the advantages of borrowing against my life insurance policy?

Six benefits of borrowing from life insurance include easy access, no credit check or approval process, no mandatory monthly payments or credit score impact, no need to explain why you are borrowing or how you plan to spend the money, lower interest rates than credit card or bank loans, and potential tax advantages.

Should I borrow from my life insurance policy?

Whether or not to borrow from your life insurance policy depends on your situation, and you should consider factors such as how the loan will impact your policy, if you can afford the loan and interest, and the compound interest rate. It may make sense if you have no better option to raise cash, your family no longer needs the death benefit, you plan to borrow only a small portion of your cash value, and you plan to repay the loan soon.