How Does Borrowing Against Life Insurance Work? 
When you borrow against a whole life policy , which I do not recommend unless it is an emergency or special situation , you will get interest charged . You do not have to pay the money back since the loan and interest will be deducted from the death benefit , however interest can accumulate and eat up your policy benefit , so you should always at least pay the interest on the policy . In the case of a Universal Life policy , the same is true however because of the way the Universal Life policy is set up , loans can cause your policy to lapse if you are not careful . Before taking a loan on any policy make sure you discuss it with your agent or if you can no longer find your agent , talk to an agent in your area you can trust . 