How to Borrow Against a Universal Life Insurance Policy

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Borrowing against a universal life insurance policy always requires you to consider a few very important things. Borrow against a universal life insurance policy with help from a personal finance expert and professional in this free video clip.

Part of the Video Series: Personal Finance & Life Insurance
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Video Transcript

Hi, this is Walter Pardo. I am managing director and founder of Wealth Financial Partners and WFP Tax Partners in Basking Ridge, New Jersey. Today we're going to talk about how to borrow against your universal life insurance policy. The first thing is to make sure that you do have a policy that has a cash accumulation. In this case we're talking about a member of the permanent insurance family which is called a universal life policy. After a period of time there is cash accumulation in that policy and in your contract is stated you can borrow from that cash or a portion of the cash at any point during the term at a given stated rate that's on your contract. Now what you do usually is there are some websites you can go to right to see your policy and you can even borrow right there and then from it, send me a check for X amount. If not, I would recommend you talk to an agent or a member of that particular group to see how they can initiate a loan on your policy and remember, it is a loan on your policy, you have two options. You can pay it back or you can die and then the amount debited with interest will be debited, will be subtracted for the death benefit. So again, your death benefit will be reduced by whatever amount you take out and the interest that you charge you which is in your policy contract and you can only do this with cash accumulated policies which are permanent insurance, either whole life or in this case, universal life products.


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