How to Borrow Against a MassMutual Life Insurance Policy

Eligibility and Policy Types

Only permanent life insurance policies—such as whole life or universal life—held with MassMutual allow policy loans. Term policies do not build cash value, so they cannot be used for borrowing. The policy must have accumulated sufficient cash value, typically at least a few hundred dollars, to cover the loan amount plus any fees.

How the Loan Works

A policy loan draws directly from the cash value that the insurer holds on your behalf. MassMutual does not require a credit check or a separate application; the loan is secured by the policy itself. Interest accrues daily, and you can choose to repay the loan at any time, though unpaid interest is added to the loan balance.

Steps to Initiate a Borrow

• Contact your MassMutual agent or log into the online portal.
• Confirm the cash‑value amount and the maximum loan you can request.
• Complete the loan request form, specifying the amount and repayment preference.
• MassMutual processes the request, typically within a few business days, and disburses the funds via check or direct deposit.

Costs and Interest Rates

MassMutual charges a loan interest rate that is usually tied to the insurer's standard rate schedule, often a few percent above the prime rate. There may be a small administrative fee for processing the loan. All costs are disclosed in the loan agreement before you sign.

Impact on Policy Benefits

Borrowing reduces the cash value available for future growth and may affect the death benefit. If the loan balance plus accrued interest exceeds the cash value, the policy could lapse, ending coverage. To avoid this, monitor the loan balance and consider partial repayments.

Repayment Options

You can repay the loan at any time, either in a lump sum or through scheduled payments. Repayments first cover accrued interest, then reduce the principal. If you do not repay, the outstanding amount is deducted from the death benefit when the insured passes away.

Tax Considerations

Policy loans are generally not taxable because they are not considered distributions. However, if the policy lapses with an outstanding loan, the amount may be treated as a taxable event. Consult a tax professional to understand your specific situation.

Comparing Borrowing to Other Options

When Borrowing May Be Appropriate

Consider a policy loan for emergencies, short‑term liquidity needs, or when other borrowing options are more costly or unavailable. It is most suitable if you have a well‑funded policy and can manage the repayment without jeopardizing the policy's long‑term goals.