What Happens When You Borrow From Life Insurance? 
Permanent forms of cash value life insurance accumulate tax deferred . You can borrow cash values within the limits of their policy provisions . There are policy loan charges that can range from zero net cost loans to direct recognition loans , i.e. up to 350 , sometimes 400 basis points . Other policy loan provisions include wash loans , spread loans and participation loans depending on what type of permanent cash value life insurance you own . 