07 July, 2020

Quora Answer: Can I Borrow Money from My Term Life Insurance Policy?

The following is my answer to a Quora question: “Can I borrow money from my term life insurance policy?

No, because a term life policy has no surrender value.  There is nothing to borrow against.  This lack of surrender value is the reason why term life policies tend to be cheaper than whole life and other non-term policies.  You may borrow against your whole life, but it is not recommended, and should be viewed as a last resort.  The premium loan is rate where I am is 6% per annum, and it does not vary much from this elsewhere.  This can quickly snowball and eat into your coverage.  It may be cheaper to borrow elsewhere.  Even short-term loans from the bank can be had for less than this.



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