Does Borrowing Against Your Life Insurance Policy Work? 
First of all , cash value life insurance is a bundled product and a bad investment . You should always separate your life insurance from any savings or investing that you are doing . Remember , life insurance is only there to protect your assets , pay off any remaining debt , and replace an income for your spouse . With this said , borrowing from a cash value policy means that you are borrowing from yourself and paying interest on the money that is saved in the policy . At the same time , your death benefit will decrease dollar for dollar by the money that you borrowed from your cash value . Now , you are paying the same premium for less insurance . Therefore , the benefits derived from borrowing from a life insurance policy will only be on the side of the insurance company . 