Can You Borrow From Health Choice Life Insurance?

Borrowing from Your Health Choice Life Insurance Policy

Health Choice's whole‑life policies include a cash‑value component that can be borrowed against. Policyholders can request a loan, which is secured by the accumulated cash value and is available as a lump‑sum or a line of credit. The loan does not affect the death benefit unless it is not repaid.

Eligibility and Loan Limits

To qualify for a policy loan, you must own a qualifying Health Choice policy and the policy must be in force. The maximum loan amount is typically 80 % of the policy's cash value, though the company may impose a lower limit. Loans can be taken at any time, but the policy's cash value must remain above a minimum balance required to keep the policy active.

Interest Rates and Repayment

Interest is charged on the outstanding loan balance. Health Choice sets a fixed rate that is reviewed annually; rates are generally higher than market rates for unsecured loans but lower than credit‑card rates. Repayment is optional; if you do not repay, the interest accrues and is added to the principal. Unrepaid interest reduces the death benefit and the remaining cash value.

Tax Implications

Policy loans are typically tax‑free as long as the policy remains in force and is not classified as a Modified Endowment Contract (MEC). However, if the policy lapses with an outstanding loan, the loan amount may be treated as taxable income. It is advisable to consult a tax professional before taking a loan.

When to Consider a Policy Loan

Borrowing from a life‑insurance policy can be useful for short‑term liquidity needs, such as covering unexpected medical expenses, consolidating high‑interest debt, or funding a major purchase. Because the loan is secured by the policy's cash value, it often comes with lower risk than unsecured credit. Nonetheless, borrowers should weigh the impact on the death benefit and long‑term cash‑value growth.

How to Apply for a Loan

Contact your Health Choice agent or log in to your online account to submit a loan request. The agent will review your policy's current cash value, calculate the maximum loan amount, and explain the terms. Once approved, the funds can be disbursed via check, direct deposit, or wire transfer.

Key Takeaways

• Health Choice policies allow loans up to 80 % of cash value.
• Interest is charged annually and accrues if not repaid.
• Loans do not affect the death benefit until unpaid interest is added to the principal.
• Tax‑free as long as the policy stays in force; consult a tax advisor if unsure.
• Use policy loans for short‑term needs but consider the long‑term impact on your policy's value.