Should You Take a 401k Loan?
Or a loan from your life insurance cash value
Here is a topic that has been requested multiple times and also a question asked in DMs multiple times.
“I have [some expense] and need money for it. My 401k has a loan option (or life insurance policy has cash value with a loan option). Should I use that for a source of funds?”
It is never easy to answer these very bespoke questions as there is a ton of variation in 401k loans, insurance policy designs, and reasons the money is needed.
However, in a general sense, I can hit on some of the basic ways these loans work and whether they are a good source of money in a pinch or if you just want some liquidity.
[Reminder - always review your own situation and products with your own advisor, accountant, whatever. The last thing you want to do is take general guidelines from online and assume it is 100% the same for your situation. That is a good way to make a costly mistake.]
