What Is A Life Insurance Loan? 
A life insurance loan often refers to borrowing from an insurance company using the cash value of the policy as collateral . The percentage of the policy 's cash value you can borrow varies by type of policy , but can be as much as 90 % . It is important to pay the interest on the loan , otherwise the compounding could put the policy at risk of lapsing . In Canada , if you borrow in excess of the adjusted cost base of the policy , it is a taxable event . Should you repay the loan , you receive a tax credit . If you borrow from a bank using the policy as collateral it does not trigger a taxable event . If you have further question , or feel I could be assistance , please do not hesitate to contact me . 