What is the term for borrowing against the cash value of a life insurance policy?

The term for borrowing against the cash value of a life insurance policy is known as a policy loan. This type of loan allows the policyholder to access funds from their policy's accumulated cash value while still keeping the insurance coverage in effect. The loan is typically secured by the cash value of the policy, and interest may accrue on the amount borrowed.

The advantages of taking a policy loan include the ability to access funds without needing to undergo a credit check, as the policy itself secures the loan. Borrowers also have the option to repay the loan over time, although any unpaid loan amount will be deducted from the death benefit if the insured passes away before repayment.

Other options such as premium advance, cash surrender, and loan against value do not precisely capture the nature of this specific transaction. A premium advance refers to an arrangement involving the payment of premiums, while cash surrender refers to cashing in the policy and terminating the coverage. Loan against value is more of a general term that does not specifically denote life insurance policies, making policy loan the most appropriate term in this context.