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Cash Value & Policy Loans
Learn how cash value works in permanent life insurance and what to consider before taking a policy loan.
The basics
How Cash Value Works
Cash value is a feature of many permanent life insurance policies. Part of the premium may support a value that can build over time under the policy’s terms.
Not every policy has it
Growth may be guaranteed or non-guaranteed
Access can reduce policy value
Policy terms control the details
Before you borrow
Four Questions to Ask
What is available?
Check the current cash value and the amount your policy allows you to access.
What will it cost?
Loans generally accrue interest, and rates and methods vary by policy.
What changes?
A loan can reduce cash value and the death benefit if it is not repaid.
Could it lapse?
A large loan balance can increase lapse risk, which may have tax consequences.
Compare options
Ways to Access Value
Depending on the policy, you may have more than one way to access value. Each choice can affect coverage, taxes, and future policy performance.
Policy loan
Borrow against eligible cash value. Interest applies, and the balance can affect benefits and lapse risk.
Withdrawal
Take out part of the cash value. This may reduce the policy’s value or death benefit.
Surrender
End the policy for its surrender value, if any. Coverage ends and charges or taxes may apply.
Leave it in place
Keep the policy unchanged while you review current values, guarantees, and non-guaranteed assumptions.
Next step
Review Your Policy Questions
Bring your policy details and questions to a licensed insurance professional or qualified tax adviser. This page provides general education, not individual advice.