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Can a whole life insurance policy be used to secure a loan through collateral assignment?

specifically a home loan. Also, if it does secure a loan, how much? based on value of death benefit or cash value?

Public Comments

1. Sorry, life insurance can not be used as a collateral to secure a loan. Why? The beneficiary on your policy is most likely your family members. If you don't have a name beneficiary, the death benefit goes to your estate when you die. The cash value in your life policy is really an insurance for the insurance company in case the insurance company can't pay future death claims. If you want to take money out of it, you have to borrow it and pay loan interest on it. Your cash value also has a low rate of return between 1-4%. God forbid if you die someday, the insurance company keeps all the cash value.
2. Yes you can use a policy to secure a loan with a collateral assignment. It is a simple form that is readily available from the policy owner service departments at most companies. It does not matter that it is whole life, term life, etc..