Life insurance policies that allow borrowing are typically referred to as 'cash value' or 'permanent' life insurance policies. These policies build up a cash value over time, which can be borrowed against. There are several types of life insurance policies that fall into this category, including whole life insurance, universal life insurance, and variable life insurance.
Whole Life Insurance: Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured. It has a cash value component that grows over time, and policyholders can borrow against this cash value.
Universal Life Insurance: Universal life insurance is another type of permanent life insurance that offers a cash value component. Policyholders can borrow against the cash value of the policy, and they also have the flexibility to adjust their premium payments and death benefit.
Variable Life Insurance: Variable life insurance is a type of permanent life insurance that allows policyholders to invest a portion of their premiums in various investment options. The cash value of the policy can fluctuate based on the performance of these investments, and policyholders can borrow against the cash value.
It's important to note that borrowing from a life insurance policy can have implications on the death benefit and the policy's overall performance. The borrowed amount may accrue interest, and if it is not repaid, it may reduce the death benefit that is paid out to beneficiaries. Additionally, borrowing from a life insurance policy should be carefully considered, as it may impact the policyholder's ability to accumulate cash value and achieve long-term financial goals.
Please consult with a licensed insurance professional or financial advisor for personalized advice regarding life insurance policies that allow borrowing.