How long does it typically take to receive money from a life insurance loan?
UPDATED: Apr 29, 2013
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Asked April 29, 2013
There is no definite length of time that must elapse before you receive the money from a loan against your own life insurance policy. Life insurance is regulated on a statestate by state by state basis, but individual procedures within a company can also be regulated inside the company as well. Rest assured that, as long as you own the policy and have been keeping it current, you will be able to borrow against the policy. Be patient and stay in contact with the insurance company.
In general, you can get the money from a life insurance loan anywhere from 1 to 15 days after you request the loan from the company. If the company's main office is in the same town, your loan could be ready by the next business day. In most cases, the insurance company will advise you that the process takes from 5 to 15 days. So if you use 2 weeks as the estimated waiting period, you may get pleasantly surprised by receiving it after only a few short days.
Some insurance companies are able to cut you a check on the spot. For this, you would go into a local insurance office, fill out the forms requesting a loan against the accrued value of the policy and then wait for the agent working on your case. If the company is set up to make immediate loans, your agent can have the check ready for you before you walk out the door.
Other insurance companies have to go through the main company office in order to get the loan for you. In a situation like that, you can expect the delay between "applying" for the loan and getting it to differ from one company to another. You may be able to get the check within the first 3 business days, or it may take a little longer. If the company mails the check out to you instead of allowing you to pick it up at the office, you should add at least 3 days to the wait because of the delay caused by postal mail.
Keep in mind that you can only borrow against the accrued value of the policy, not against the face value. This means that if you had accrued $1500 between your premiums and the interest they have earned, you could borrow against that amount, regardless of how much the policy itself is written for. Check the cash value of the policy before you try to borrow, and resist the urge to borrow the maximum available. After all, the loan will still be charged interest, so borrowing more from it than you need will only reduce your policy value, and take you longer to repay.
Answered April 29, 2013 by Anonymous