When is it Okay to Borrow from my Life Insurance Policy?
Borrowing from your life insurance policy may pose benefits for you opposed to a loan that will come with high-interest rates. You are not required to have a credit check, and you do not have to pay back whatever you take from your policy. If you decide to pay your policy back, the interest for the money you borrowed is not as high as it would be for a loan.
Most people would advise against taking money out of your life insurance policy, but according to the article, 4 Times It's Okay to Borrow From Your Life Insurance Policy, in the situations listed below, it might be acceptable.
You Lost Your Job
Even if you are a hard worker, there is always a possibility that you may lose your job. It may be through no fault of your own, but what will you do for money in between jobs? If you do not receive severance pay and you do not have much money in savings, it would be appropriate to borrow from your life insurance fund.
You’re Unable to Work for a Short Amount of Time
If you become sick and you’re unable to work for a short period of time, and you do not have any type of insurance, taking money out of your life insurance policy may be necessary to make ends meet. Many times, employers will offer you short-term disability coverage, but you will receive better protection if you obtain a private plan.
You Need Money to Purchase a Home
If you do not have enough money for a down payment for a house, taking out what you cannot afford from your life insurance policy may be something to consider.
You’re Starting a Business
Starting a new business can be a rewarding endeavor, but it can also be very expensive. If you cannot afford to spend all of your savings, you should think about borrowing from your life insurance policy. If your business takes off, you will be able to pay back your insurance provider.