How to Use Money From Life Insurance Policies
If you find yourself backed up against a wall of debt, there's hope if you have cash value life insurance. Not all life insurance policies build cash value, but if yours does, the cash value in your policy is yours to use. Most people pay their monthly premiums and forget that the policy builds cash. And unlike with a home equity loan, you don't have to jump through hoops to get the money from the life insurance policy.
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Instructions
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1
Check your policy. If you've had a policy for a considerable time, you probably have cash value. Your policy might include a chart that shows how the cash value accumulates. If you have a variable policy, you should receive an annual statement that tells you the cash available.
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2
Find the phone number of the local representative, look for the company's online website or call the customer service number for your company to confirm the cash value available.
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3
Request a loan form if you own a variable, universal, universal variable or other whole life policy. In many cases, you can apply online at the company's website. Some companies allow you to apply for the loan by phone. You must be the owner of the policy to receive the loan; sometimes the owner of the policy is not the same person as the insured.
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Fill out the form with the policy number, your name and the amount of money you want.
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Remember that even though the company refers to it as a loan, you don't have specific payments to make back to the company. You will have to pay interest but, since the cash value grows as though the money were still inside, the interest is usually minimal. If you don't pay it back, the company reduces the amount of the death benefit by the outstanding amount of the loan. If you have a universal or universal variable policy, the insurance company might increase the premium to offset the lack of growth on the cash value that normally pays the increasing interior term cost.
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Ask to have the funds put directly into your checking account, which gives you quicker access to the money than you would have if you asked for a check by mail, deposited the check and waited for it to clear.
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Tips & Warnings
Although you don't have to pay the funds back, it's wise to make payments on the loan. This makes the funds available for another emergency or for the death benefit.
Some companies require that you have a minimum amount of cash value before you can take a loan. If your policy isn't worth more than that minimum, you must wait until it grows to that amount.
