Is Borrowing Against Life Insurance A Good Idea? 
Borrowing against life insurance policies can be a good idea and many policies are designed to provide cash to use for college funding , retirement income , or emergencies . Some policies , especially Indexed Universal Life Insurance , have a loan option where the borrowed money comes from the insurance company 's general account . This allows your money to stay in your account earning uninterrupted compound interest . This is a great way to build wealth by using `` other people 's money '' . As noted above , your policy must not lapse to maintain the tax advantages of this strategy . 