What Kind Of Life Insurance Can You Borrow Against? 
The types of life insurance policies you may borrow from are cash value or permanent life insurance policies . These polices are commonly named whole life insurance , variable life insurance , universal life insurance or indexed universal life insurance . The cash value builds over time and will typically take about 5 years to accumulate enough cash value to begin taking loans . The first few years of premiums are used to fund the death benefit . The money is taken in the form of a loan in order to avoid paying taxes . If the money is withdrawn from the plan and not in the form of a loan , the coverage can lapse and the funds are subject to income tax . It is always a good idea to consult your agent or insurance company to avoid a costly mistake when taking money from a cash value life insurance plan . 