Borrowing Against Your Aflac Life Insurance Policy: What You Need to Know

Can You Borrow From an Aflac Life Insurance Policy?

Aflac offers a variety of life insurance products, many of which include a cash value component. The ability to borrow against that cash value depends on the specific policy type. Traditional whole life policies and certain universal life policies hold a cash reserve that policyholders can access through a policy loan. However, many term life policies sold by Aflac do not accumulate cash value, so borrowing is not an option there.

How Policy Loans Work

When you take a loan against your cash value, the policy remains in force. The loan amount is deducted from the policy's death benefit and the policy's cash value. Interest accrues on the loan, and if you do not repay, the outstanding balance reduces the benefit paid to beneficiaries. Loans can be paid back at any time, but the interest rate is typically fixed and set by Aflac's terms.

Key Conditions to Check

• Policy Type – Only whole or universal life policies with a cash value allow loans.
• Cash Value Availability – The policy must have accumulated sufficient cash value to cover the loan amount.
• Loan Limits – Aflac usually caps the loan at a percentage of the cash value, often 90%.
• Interest Rate – Verify the current rate, which may be fixed or variable.
• Impact on Premiums – A loan does not affect premium payments, but a large loan could trigger a policy lapse if the cash value falls below the required minimum.

Steps to Initiate a Loan

Contact your Aflac agent or log into your online account. Request a loan statement that shows current cash value, outstanding loans, and interest. Submit a written request or complete an online form, specifying the loan amount and repayment preference. Aflac will process the request and issue a check or direct transfer.

Considerations Before Borrowing

Borrowing can provide liquidity for emergencies, debt consolidation, or investment opportunities. However, it reduces the death benefit and may affect the policy's tax treatment. If the loan remains unpaid for an extended period, the policy could lapse, leaving you without coverage. Evaluate whether the benefit outweighs the potential downsides.

Alternatives to Policy Loans

• Cash Value Withdrawal – Similar to a loan but may trigger tax consequences and reduce the death benefit permanently.
• Other Credit Sources – Personal loans, lines of credit, or credit cards may offer lower interest rates.
• Reinsurance Options – Some insurers offer policy riders that allow borrowing with different terms.