We all have emergencies crop up from time to time – things like unexpected car repairs, or unplanned travel – and some of those things may require a hefty amount of cash. Where can you find it? Well, if you have a life insurance policy with a cash value, you may be able to borrow against it for fast funds with low interest. How do you do that? Here are some tips:
- Review your policy to estimate the cash value. Most likely, this information will actually be on your most recent annual statement. Whatever the value is, you should assume that you can’t take more than 90% of it.
- Make a note of the contract number on the title page of your policy or on your statement, and then call your insurer’s office during regular business hours. Be aware that insurance companies typically have hours from 8:30am – 4:30pm, and not from 8-5.
- Speak with an agent or customer service representative about what your exact cash value is, and how much of it you may borrow, then go through whatever question-and-answer session or application they require.
- In most cases two things will happen:
- Your premium will be increased by the amount of your required loan payments.
- You will receive a paper check, not a wire or electronic transfer. Your signature on the check will signify your acceptance of the loan terms.
Remember that not every life insurance policy allows you to borrow against it, so be sure to check on your policy. If you’re shopping for life insurance, and foresee the need to borrow as a possibility, make sure that feature exists before you commit to the policy at all.