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The Hidden Advantages of Borrowing from Permanent Life Insurance: Why It's a Smart Financial Move

Updated: Feb 20, 2023

There are several benefits to borrowing from a permanent life insurance policy instead of a traditional bank, some of which are:

Tax-free loans: The loan you receive from a permanent life insurance policy is typically tax-free, whereas a loan from a bank is subject to interest and may be taxable.

No credit checks: There is no credit check required to borrow from a permanent life insurance policy, as the loan is secured by the policy's cash value. This can be beneficial if you have a low credit score or if you don't want to risk damaging your credit score by applying for a loan.

Flexibility: With a permanent life insurance policy, you can choose to repay the loan over a longer period of time, which can help make the payments more manageable. Additionally, if you change your mind, you can choose not to repay the . However, this will reduce the death benefit paid to your beneficiaries.

No collateral is required: Unlike a traditional bank loan, you do not need collateral to secure a loan from a permanent life insurance policy.

Access to funds: If you ness funds in an emergency, a loan from a permanent life insurance policy may be more accessible than a traditional bank loan, which can take several days or weeks to approve and disburse.


It's important to note that borrowing from a life insurance policy may reduce the death benefit paid to your beneficiaries. It can also reduce the policy's cash value and death benefit if the loan is not repaid. Before borrowing from a permanent life insurance policy, it's essential to carefully consider the pros and cons and consult with a financial advisor.


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