Can You Take Out A Loan On Your Life Insurance? 
If you own a permanent -LRB- cash value -RRB- life insurance policy policy loans should be possible . Each policy contains provisions which explain how policy loans can function for that particular contract . As long as the policy loan does not grow too large relative to the cash value available in the policy , there should n't be a problem . While you do n't have to repay the loan - it can be repaid out of the death benefit - care must be taken to ensure the policy is not caused to lapse as income tax would be payable in the year of lapse subject to all of the gain over the life of the contract . 