Life insurance policies that allow you to borrow against them are typically referred to as 'cash value' or 'permanent' life insurance policies. These policies build up a cash value over time, which can be used as collateral for borrowing. Here are some types of life insurance policies that often offer this feature:
1. Whole Life Insurance: Whole life insurance policies provide coverage for your entire life and have a cash value component that grows over time. You can borrow against the cash value of the policy, usually at a low interest rate. Keep in mind that borrowing against the cash value may reduce the death benefit.
2. Universal Life Insurance: Universal life insurance policies also have a cash value component that can be borrowed against. These policies offer more flexibility in terms of premium payments and death benefit options.
3. Variable Life Insurance: Variable life insurance policies allow you to invest the cash value portion of the policy in various investment options. You can borrow against the cash value, but keep in mind that the cash value may fluctuate based on the performance of the investments.
It's important to note that borrowing against your life insurance policy is not the same as surrendering or canceling the policy. When you borrow against the cash value, you are essentially taking out a loan from the insurance company, and the policy remains in force as long as you continue to pay the premiums. Additionally, the borrowed amount may need to be repaid with interest, and if it is not repaid, it may reduce the death benefit.
Please consult with a financial advisor or insurance professional for more information on the specific terms and conditions of borrowing against a life insurance policy. They can help you understand the potential impact on your policy and provide guidance based on your individual needs and circumstances.