You can typically only borrow from permanent life insurance policies that build cash value, not from term life insurance policies. These permanent policies include whole life and several types of universal life coverage that accumulate a cash value you can tap through a policy loan.

Policies you can borrow from

The key requirement is that the policy has a cash value component, because that cash value serves as collateral for the loan.

  • Whole life insurance policies, which combine lifelong coverage with guaranteed cash value growth, are among the most commonly used for borrowing.
  • Universal life policies, including standard, variable, and indexed universal life, often allow loans once enough cash value has built up.
  • Insurers typically let you borrow up to around 90% of the current cash value, not the face amount (death benefit) itself.

Policies you generally cannot borrow from

Some policies do not build cash value, so there is nothing to borrow against.

  • Term life insurance, which provides coverage for a set number of years with no savings component, normally does not permit policy loans.
  • Low-cost “no frills” policies that lack a cash value feature also will not support borrowing, even if they are marketed as permanent coverage.

How borrowing from life insurance works

Once your eligible policy has built enough cash value, borrowing is usually straightforward and does not involve a credit check.

  • The insurer lends you money using the policy’s cash value as collateral, often up to about 90% of that value.
  • Repayment schedules are flexible, but interest accrues; any unpaid loan and interest are deducted from the death benefit and can even cause the policy to lapse if the loan grows too large.

When it can make sense

Borrowing against life insurance can be useful in specific situations, but it carries trade-offs.

  • It may help if you need relatively quick access to cash without income or credit requirements and you already have a sizable cash value built up.
  • It can be risky if you rely on the full death benefit for your family’s financial security, since loans and interest reduce what your beneficiaries receive and can trigger taxes or policy cancellation in extreme cases.

Practical next steps

To know exactly which life insurance you can borrow from and how much, you need details from your own policy.

  • Review your policy or online account to confirm whether it is whole life, universal life, variable, or term, and whether it shows a cash value balance.
  • Ask your insurer or agent for an in‑force illustration that shows current cash value, maximum available loan amount, and how a loan would affect your future premiums and death benefit.

Information gathered from public forums or data available on the internet and portrayed here.