Policy Loan
If you own life insurance, you are able to take out a policy loan against the cash value of your life insurance policy. Policy loans are issued by the life insurance company. They use their funds from all customers to fund policy loans. This works because not every customer will apply for a policy loan.
Loans will reduce the death benefit or cash value of a policy, so they should not be the first resort when you are in need of cash. However, borrowing against your life insurance policy can be a way to fix a cash crunch, and you may required to make extra payments, as the amount can be deducted from the premiums you pay, which in the long run can reduce the amount of death benefit. You have to decide if this is a reasonable way to fix your cash crunch, or if there might be another option out there.
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