Home Life insurance Life insurance questions Can a beneficiary take out a loan on a life insurance policy? Can a beneficiary take out a loan on a life insurance policy? By Barbara Marquand | Posted on July 9, 2012 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. A beneficiary generally cannot take out a loan on a life insurance policy unless the beneficiary is also the policyholder or has power of attorney to make financial decisions for the policyholder. A life insurance policy includes three parties: The policyholder, who owns the policy and is responsible for paying the premiums.The insured, whose life is insured.The beneficiary, who receives the death benefit when the insured person dies. Sometimes one person plays two roles. A wife, for instance, might purchase a policy insuring her husband’s life and name herself as beneficiary. In this case, she would be both the policyholder and the beneficiary. Or a husband could purchase a policy insuring his own life and name his wife as beneficiary. In this case, the husband would be the policyholder and the insured. The policyholder controls all the decisions, including whether to cash out the policy, change the beneficiary or borrow from the cash value. There is one exception to the rule. If the policyholder completed a power of attorney document appointing someone to make financial decisions for him or her, then that appointee could make decisions regarding the life insurance policy. Does the beneficiary in your instance have power of attorney? For more, see Who’s who on a life insurance policy. × Get Free Life Insurance Quotes Today! Zip Code Please enter valid zip Age Age 16 – 20 21 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+ Coverage Amount Coverage Amount $50,000 – $100,000 $100,000 – $200,000 $200,000 – $300,000 $400,000 – $500,000 $500,000 – $1,000,000 $1,000,000 – $2,000,000 $2,000,000 – $5,000,000 $5,000,000+ Coverage Type Coverage Type Whole Life Term Life Final Expense Not Sure Gender Gender Male Female Non-Binary Tobacco Use Yes No Compare Quotes QuickTake How life insurance works during a divorce Can you change the coverage of your term life insurance? Can you cash in a paid up life insurance policy? Can I withdraw money from my life insurance policy? How can I get life insurance if I'm in poor health? Are you too old to buy affordable life insurance? Do life insurance policies pay out if you die of old age? Can relatives steal your life insurance money? Can someone take out a secret life insurance policy on you? Protect yourself from insurance revenge during divorce What is demutualization and what does it mean for policyholders? Can I take out a life insurance policy on my spouse? What to do if your life insurance policy lapses How to find lost life insurance policies Can I withdraw money from my term life insurance? How to forfeit life insurance proceeds? How do wills work with life insurance? Frequently asked life insurance questions Life Insurance: Waiver of premium is it worth paying how to find a lost life insurance policy of my relative? how to find a lost life insurance policy of my father? Would an accidental death policy pay for a cocaine overdose? Is the life insurance payout I received taxable? will life insurance pay if drunk driving can you cash in a life insurance policy Burial Insurance for Funerals Expenses Basics of term life insurance policy Can I find life insurance policies of deceased mother Can I find life insurance policies of deceased dad Would an AD&D claim be denied due to accidental overdose Can an ex-spouse collect life insurance money? What is API financial rating of life insurance companies Questions to ask when found the lost life insurance How long must I wait to get nonsmoker life insurance rates? Can a life insurance beneficiary change on deathbed? how to find a lost life insurance policy what happens to cash value in whole life policy at death How long do you have to be a non smoker for life insurance? See more > Related Articles Can you change the coverage of your term life insurance? By Insure .com Can you cash in a paid up life insurance policy? By Les Masterson can you cash in a life insurance policy to pay off debt? By Barbara Marquand Can I withdraw money from my life insurance policy? By Desiree Ghazi How can I get life insurance if I’m in poor health? By Desiree Ghazi Do life insurance policies pay out if you die of old age? By Desiree Ghazi