It depends on the type of life insurance policy you own.
There
are two basic types of life insurance: -
1. Term
Life Insurance - these typically don't have any cash value (some may have a
return of premium at the end of the policy term).
2. Permanent
Life Insurance - these include whole life, universal life, indexed universal
life and variable life insurance plans. These will typically have some
level of cash value that builds up inside the policy over time.
The
life insurance policies with cash value typically do have a loan provision. Those
policies with this provision will usually allow the owner of the life insurance
policy to borrow up to 80% of the cash value inside the policy.
Note: If you borrow money from your life insurance
policy cash value and don't pay back the money, the remaining cash value will
be used to keep the life insurance policy active. When that cash value is
exhausted the policy would lapse or you may receive a bill for a large amount
to keep the policy going. This could also create a tax event on the money
you originally borrowed from your policy.
Learn more about term life insurance vs permanent life insurance.