Can You Borrow Against Burial Insurance?

Burial insurance, also known as final expense insurance, is a small whole life policy designed to cover end-of-life costs like funeral, burial, or cremation services. One question people often ask is: “Can I borrow money from my burial insurance policy?” The answer depends on the type of policy you have and how long you’ve held it.

In this guide, we’ll explain when you can borrow against your burial insurance, how it works, and the pros and cons to help you decide whether it's a smart option for your financial needs.

1. First, Understand How Burial Insurance Works

Burial insurance is typically a whole life insurance product, meaning:

  • Coverage lasts for your entire life (as long as premiums are paid)
  • Premiums are fixed
  • It builds cash value over time

This cash value component is what makes it possible to borrow against your policy—but only if enough value has accumulated.

2. Can You Borrow from a Burial Insurance Policy?

Yes—If Your Policy Has Accrued Cash Value
Most burial insurance policies do build cash value slowly over time. Once you’ve owned the policy for a few years (usually 2–5+), that cash value may be available to borrow as a policy loan.
No—If It's a New Policy or Term-Based Plan
  • If your policy is new, it likely hasn’t built up enough cash value yet.
  • If your plan is term insurance (rare for burial coverage but still possible), it won’t have any cash value at all—so borrowing is not an option.

Check with your insurance provider to see your current policy value and loan eligibility.

3. How Borrowing from Burial Insurance Works

If eligible, you can borrow money from the cash value in your policy—similar to a personal loan, but without a credit check or approval process.
Key Features:
  • You’re borrowing from yourself, not from a bank
  • No credit score requirements
  • Low or moderate interest rates (set by the insurer)
  • No set repayment schedule—you choose if/when to repay

However, if the loan isn’t repaid, the unpaid balance plus interest is deducted from the death benefit your beneficiaries receive.

    4. Pros and Cons of Borrowing from Burial Insurance

    Pros:
    • Quick Access to Cash: Often faster than applying for a personal loan
    • No Credit Impact: Doesn’t affect your credit report or require credit approval
    • Flexible Repayment: You choose if and when to repay the loan
      Cons:
      • Reduces Death Benefit: If unpaid, your beneficiaries will receive less
      • Interest Accrues: If you don’t repay, the debt grows over time
      • Not Ideal for Large Needs: Cash value builds slowly and is usually small in burial policies

        5. Example Scenario

        Let’s say you’ve had a $10,000 burial insurance policy for 7 years. Over time, it’s built up $1,500 in cash value.

        • You borrow $1,000 from the policy
        • You don’t repay it
        • Upon your passing, your beneficiaries receive $9,000 minus any interest accrued

        Always keep beneficiaries informed if you borrow from your policy—so there are no surprises later

        6. Alternatives If Borrowing Isn’t an Option

        If your burial insurance doesn’t have enough cash value yet, consider these alternatives:

        • Personal loans from banks or credit unions
        • Family assistance, if possible
        • Credit cards (though interest rates are high)
        • Selling unused assets or insurance riders (if applicable)

        Avoid canceling your burial insurance policy just to access funds unless absolutely necessary— especially if you’re older and would struggle to get new coverage.

        7. How to Check If You’re Eligible to Borrow

        • Call your insurance provider
          Ask about your policy’s current cash value and loan availability.
        • Request a policy illustration
          This document outlines how much your policy is worth now and how much you can borrow.
        • Review interest rates and terms
          Understand how interest accrues and how it affects your death benefit.
        • Decide whether to repay
          You can repay on your schedule—or not at all. Just know the loan will be deducted from the payout when you pass.

        8. Final Thoughts: Should You Borrow Against Burial Insurance?

        Borrowing against your burial insurance can be helpful in an emergency—but it’s not a free ride. You’re essentially dipping into your own future funeral fund, and that could leave your family with fewer resources when they need them most.

        If you’ve had your policy for several years and need quick cash with minimal paperwork, a policy loan may be a good option. But always weigh the long-term impact, and consider other financial solutions first.

        Need Help Reviewing or Upgrading Your Burial Policy?

        At AffordableBurialInsurance.com, our experts can help you:

        • Understand your current policy’s loan features
        • Find burial insurance plans with better cash value growth
        • Compare quotes to find more affordable or flexible coverage

        Contact us today for a free policy review or to explore new burial insurance options that fit your needs and goals.