---
title: Can I borrow money from my life insurance | Coverfolk
url: https://coverfolk.com/answers/borrow-from-life-insurance
updated: 2026-10-08
---

# Can I borrow money from my life insurance?

Updated October 8, 20264 sourcesCoverfolk team[Fact checked](/editorial-standards)

The short answer

Yes, if you have a permanent policy with cash value. Term life has no cash value, so you cannot borrow from it.

A policy loan uses your cash value as the backing. You borrow from the insurer and pay interest.

If you do not pay it back, the amount you owe plus interest is taken out of the death benefit. Your family gets less.

If you cancel the policy, the loan balance also comes out of the cash you get back.

Be careful with big loans. An unpaid balance can cause the policy to lapse, and then you lose your coverage.

You can also take a partial withdrawal instead of a loan. That can shrink the death benefit too.

## More questions

### Do I have to pay the loan back?

If you do not, the amount you owe plus interest comes out of what your family gets.

### Can I borrow from term life?

No. Term life has no cash value to borrow against.

## Words to know

[Cash value](/glossary)
:   The savings part of a permanent policy. It grows over time and can be used for loans, cash, or to pay premiums.

[Lapse](/glossary)
:   When your policy ends because you did not pay the premium in time. Your beneficiaries will not get the death benefit.

[Policy loan](/glossary)
:   Money you borrow from your policy's cash value. If you do not pay it back with interest, it is taken out of the death benefit.

## Sources

1. [NAIC: Life Insurance](https://content.naic.org/consumer/life-insurance.htm)
2. [Washington Office of the Insurance Commissioner: Life Insurance Guide](https://www.insurance.wa.gov/sites/default/files/2025-03/life-insurance-guide.pdf)
3. [NC Department of Insurance: FAQs About Life Insurance](https://ncdoi.gov/consumers/life-insurance/faqs-about-life-insurance)
4. [NerdWallet: What Is the Cash Surrender Value of Life Insurance?](https://www.nerdwallet.com/article/insurance/cash-surrender-value-of-life-insurance)