Can I Borrow Money from My Life Insurance to Buy a House?

Shawn Plummer

CEO, The Annuity Expert


  • For permanent life insurance (whole life insurance and universal life insurance)


Understanding Life Insurance Loans

  • Permanent Life Insurance: These policies, such as whole and universal life, build cash value over time. Policyholders can borrow against this cash value.
  • Term Life Insurance: This insurance does not accumulate cash value. Therefore, you cannot borrow against it.

How It Works with Permanent Life Insurance

  • Borrowing Process: You can take a loan against the cash value of your permanent life insurance policy.
  • Interest Rates: These loans typically have lower interest rates than bank loans but vary by policy.
  • Repayment Terms: Flexible repayment terms, but unpaid loans and interest can reduce the death benefit.
  • Tax Implications: Loans are usually tax-free but consult with a tax advisor.

Considerations Before Borrowing

  • Impact on Beneficiaries: Unpaid loans can reduce the payout to beneficiaries.
  • Policy Surrender: If the loan balance exceeds the policy’s cash value, the policy might be surrendered.
  • Financial Planning: Consider other financing options and consult with a financial advisor.


Borrowing against your permanent life insurance policy is a viable option for financing a home purchase, offering advantages like lower interest rates and tax benefits. However, it’s important to understand the implications on your policy and beneficiaries. For personalized advice, contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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