Can I take a loan out on a life insurance policy?

CraigJ1980

Hi,
I’ve heard of this quite a lot coming from America and I’m not sure if it something that you can do here.
I was wondering if someone can help.
Can I take a loan out on a life insurance policy?
Thanks in advance.

DullGreyGuy

You are generally looking at life assurance (or permanent life insurance as the US call it) where its not a question of if it will payout but when. Similarly in the US life/investment blended products remain popular whereas they fell out of fashion in the UK. These policies have a cash value which what enables them to be used with loans.

Most in the UK buy term life insurance and so the policy has no cash value because it only pays out if you die before it expires and therefore cannot be used for borrowing. In theory if you have a Whole Of Life policy (aka life assurance) then it may be possible (https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/life-cover/whole-of-life-cover/) 

What type of insurance/assurance do you have?

CraigJ1980

Thanks for your reply.
I think it’s “whole life policy” they call it.
It allows you to take a loan from this policy to purchase things. So you don’t have to take a loan from the bank.