The cash value of a life insurance policy can be used as a source of loan collateral.

Question

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The cash value of a life insurance policy can be borrowed against as collateral for a loan. This means that the policyholder can use the cash value as security for a loan that they wish to take out. The policyholder would need to pay interest on the loan, but it may be at a lower rate than other types of loans due to the collateral. The death benefit of the policy is not used as collateral, only the cash value.

The Cash Value of a Life Insurance Policy Can Be