Answers > Can You Borrow Against Life Insurance if the Place Your Work Is the One Paying for the Policy?

Caveat Emptor February 8, 2011 at 4:15 pm

No. That is term life insurance that has no cash value. Only whole life polices with a cash value can be “borrowed against.” And you can only borrow against the cash value – not the face value.

mbrcatz February 8, 2011 at 4:59 pm

No.

First of all, life insurance through work, is “group term” coverage. Term doesn’t build cash value, and you can only borrow against the cash value, so, no cash value to borrow AGAINST.

Second, only the OWNER of the policy can borrow against it – and the owner, is the person responsible for paying the premiums.

You can only borrow against a cash value policy that you own, that actually has some cash value. It’s not the death payout you borrow, it’s the CASH VALUE.

Flower February 8, 2011 at 5:32 pm

The other answers know what they are talking about. If you need money make a hardship withdrawal from your 401K and pay the tax.

Insurance Pickle.com February 8, 2011 at 6:24 pm

First of all the answer is NOT a definitive ‘NO.’ It’s just more than likely a ‘NO.’ There is a possibility that they’re paying for a group universal life policy for you. It’s just quite unlikely, but I’ve seen it before so a blanket ‘NO’ is not correct.

That being said, you would likely know whether it was a cash value policy because you’d be getting statements. But you can call and ask.

Ginger February 8, 2011 at 6:50 pm

Most life policies at work are group term policies which don’t build cash value. If that’s the case, then no, you can’t borrow what’s not there.

There are times when some workplaces buy permanent, individual life policies. If you’re in one of those rare situations, you may have cash value built up.

You’ll need to check with your plan administrator to verify.