What Type Of Life Insurance Can I Borrow From? 
Permanent life insurance has two products that accumulate cash values : Participating whole life insurance and universal life insurance . Borrowing from participating whole lifeinsurance has two types of policy loans that charge interest : spread loans and direct recognition loans . But before you borrow via loans that will cost you money , take the dividends up to your basis -LRB- your contributions -RRB- free of charges . Universal life -LRB- UL -RRB- has three cash value accumulating contracts : Current Assumption Interest Rate UL , Indexed UL and Variable UL . There are four different policy loan provisions that most UL use . Zero net cost loans , wash loans , spread loans andparticipatingloans.But before you borrow via loans that will cost you money , take your basis first -LRB- your contributions -RRB- free of charges . But be advised takingbasisfirst could trigger an ordinary income tax event for policies datedafterJune 21 , 1988 . Consult your taxadviserbefore moving forward accessing you policy using withdrawals . One last thought : Policy loans are not treated as taxable incomeproviding thatthe policy is kept in force for the lifeofthe insured , i.e. until the insured dies . If the policy is surrender orlapses out of coverage , an ordinary income tax event willoccurfor policy loansreceivedand internal policy loans that have accumulated.Consult your taxadviserbefore surrendering orallowingyour policy to lapse . 