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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