What are the benefits of borrowing against an insurance policy?
Borrowing against the built-up value of a cash-value life insurance policy can provide several benefits that borrowing money from a bank cannot. Rates on insurance policy loans are usually lower than on bank loans, no credit check is required, and loan approval is virtually guaranteed because you are essentially borrowing against money that belongs to you. Perhaps the biggest disadvantage to borrowing against your insurance policy is that it reduces the amount of money your heirs will get if you die before you have a chance to repay the loan. There’s also the irritation of knowing that you’re paying interest to the insurance company for money that’s yours anyway.
