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Borrowing against life insurance can be a useful way to get money to pay for emergencies, education, a home renovation, and more. However, it isn’t possible with every type of policy. Let's dive deeper into if you can borrow against life insurance and how a life insurance policy loan works.
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You can borrow money against permanent life insurance policies that have cash value. Permanent life insurance policies stay in place for the duration of your life, as long as you pay premiums. They are different from term life insurance policies, which only provide coverage for a specific amount of time. Cash value is a portion of your life insurance payment put into a savings-like account that grows tax-free over time.1 The cash value component is typically found in whole life insurance plans and isn't an option in term life insurance policies.1
You can take out life insurance loans against the value of the death benefit within a life insurance plan, which is the portion of money paid to the beneficiary when the policyowner dies.1 This is the amount that accrues cash value, and the amount you can borrow depends on how much cash value you’ve accrued and the insurer’s rules. However, policyholders can often borrow up to 90% of their cash value.1 The value of the life insurance policy itself is used to help guarantee the loan will be paid back.1
When you borrow against life insurance, these loans are taken out with the life insurance company rather than a bank or credit card company. They often come with a simpler approval process, since you technically own your life insurance plan's death benefit and cash value.1 Life insurance companies will charge interest on the loan monthly, and you can either pay it as it comes in or let it accrue and pay it all later.1
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Get StartedSome instances where borrowing money against your life insurance policy may make sense include:
Once you've built up enough cash value to cover your desired loan amount, you can borrow money from your life insurance policy. The amount of time it will take to accumulate the funds depends on your policy's structure, but it may take a few years to build up enough cash value to take out a policy loan.
There are a few specific instances when taking out a loan against your life insurance can be more beneficial than going the traditional route with a bank. Let's explore these pros and cons of borrowing against life insurance more in-depth.
Aflac offers whole life insurance with cash value that you can borrow against in the form of a loan. These life insurance loans can help pay for medical expenses, a mortgage, or any other bills you may have. Our life insurance plans offer competitive coverage, and you may be able to skip the medical questions. Chat with an agent today to see how our life insurance plans fit your goals.
Get Started
Looking into getting a whole life insurance plan? Find out how whole life insurance works and the benefits, costs, pros, and cons.
Life insurance with cash value lets you withdraw money to cover necessary expenses. Find out how cash value savings work and the types of insurance policies offered, including whole life insurance.
Looking into getting a whole life insurance plan? Find out how whole life insurance works and the benefits, costs, pros, and cons.
Life insurance with cash value lets you withdraw money to cover necessary expenses. Find out how cash value savings work and the types of insurance policies offered, including whole life insurance.
1 Investopedia - How Can I Borrow Money From My Life Insurance Policy? Updated September 22, 2024. Accessed March 21st, 2025. https://www.investopedia.com/ask/answers/111314/how-can-i-borrow-money-my-life-insurance-policy.asp.
2 Investopedia - Death Benefit: How It’s Taxed and Who Can Claim It. Updated September 28, 2023. Accessed March 21, 2025. https://www.investopedia.com/terms/d/deathbenefit.asp.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma & Virginia, ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. B1000: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000: In Arkansas, Oklahoma, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000: Whole: In Arkansas, Delaware Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Term: In Delaware, Policies Q60200M. In Arkansas, Idaho & Oklahoma Policies ICC18Q60200M.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908). Not available in New York.
In Arkansas, Delaware, Idaho, Oklahoma & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Receipt of accelerated death benefits may affect eligibility for public assistance programs. Benefits may also be taxable and are not expected to receive the same favorable tax treatment as other types of accelerated death benefits that may be available.
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Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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