Can A Life Insurance Policy Be Used As Collateral? 
It will depend on the type of policy you own . Term Insurance policies have no cash value and offer pure insurance coverage . If you purchase whole life or universal life insurance there is a cash accumulation account associated with the policy . This cash value is actual cash that is available to the owner -LRB- less any fees to cash policy in -RRB- . These cash funds can be used in certain situations as collateral for a loan . 