After how long does a life insurance policy typically become eligible for policy loans?

A life insurance policy typically becomes eligible for policy loans after a period known as the "loanability period," which is generally set at three years. This timeframe allows the policyholder to build sufficient cash value within a permanent life insurance policy, such as whole life or universal life, which are the types that accumulate cash value over time.

Once the cash value reaches a certain threshold, the policyholder can borrow against it. The cash value is an integral feature of permanent life insurance policies, and it allows for these loans to be taken out without needing to undergo a credit check or loan approval process as one would with a traditional bank loan.

This timeframe of three years is commonly found in many life insurance policies, though it may vary by the insurance company or specific policies. Many policies explicitly state this eligibility period in their terms, which can further clarify when a policyholder can access loans against their policy. Thus, knowing this typical period assists policyholders in making informed decisions regarding their financial planning and accessing funds when needed.