I talk to insurance agents and financial advisors all over the country. On more than one occasion as we discuss various retirement income strategies, this question or concern comes up: "But it's not YOUR money (in the cash value life insurance contract)."
Let's talk about it.
In other blog articles, I've talked about the formula for cash value life insurance:
Net death benefit = cash values + net amount at risk - any outstanding loans
In the strictest sense, it's true that the money doesn't belong to you. It belongs to the insurance company to secure and be the reserve for the given death benefit stated in the contract.
Can you withdraw cash from the contract? Yes. This will lower the death benefit and cash values.
Can you borrow against the contract? Yes. This will lower the net death benefit and remaining cash values (including accrued interest charges not paid out of pocket) you can borrow against if the loan is not repaid before your passing.
It's YOUR wealth contract. You, as the policy owner, have the right to work with your contract in (nearly) any way you see fit. You have access to the values you have accumulated in YOUR contract.
It's just important that you understand the consequences of how you choose to utilize and access the values in that contract.
The short answer is this:
You cannot access the cash values of your contract without having an effect on the net death benefit to your named beneficiaries.
Nor can you accelerate the death benefits of your contract for a qualifying reason (terminal illness, chronic illness, etc.) without having an effect on the net death benefit to your named beneficiaries.
As long as you understand the consequences of how you choose to use your policy, it's YOUR money and your wealth contract.