If you find yourself in a cash crunch, you’ll be grateful for your life insurance policy. The common misconception that life insurance is only payable to dependents upon death is false.

It is often possible to take out a loan against your life insurance policy. After all, you’ve paid into the policy, so it makes sense that you can tap into that cash in the form of a loan when under financial duress.

Life Insurance Policies and Loans

Do your due diligence when researching life insurance policies in Astoria, OR, and you’ll find they have more flexibility than you may assume. Most policies allow policyholders to take out loans from the policy after paying premiums for a certain amount of time or after hitting a specific financial threshold. As long as the policy builds a cash value, there’s a good chance you can borrow against it.

There is also an opportunity to obtain a loan using your life insurance policy as collateral. If the policy has cash value, that value can be used to qualify for a sizable loan that keeps your finances or those of your business afloat. The only catch to the loan option against the policy or using the policy for a third-party loan is that those loans are distributed with interest rates.

The silver lining is that the average life insurance loan has an interest rate significantly less than that of a credit card.

Be Patient and Your Life Insurance Could Be a Financial Lifeline

In general, it takes new life insurance policies several years to accrue sufficient value to borrow against in the form of a loan. However, as long as you pay your life insurance premiums on time and in full, the policy will remain active and valid. Such a status allows you to take out a loan against the policy.

Most life insurance loans are provided right away, without credit checks, and tax-free as they are not considered a source of income. Moreover, the cash value of the policy will continue to grow even after borrowing against it.

Contact Linda Dugan Insurance Today

Serving Astoria, OR, Linda Dugan Insurance is here to help you get the right life insurance policy. Give us a call to find out more about your life insurance options.