If you run into financial trouble, knowing your options is invaluable. Butler says term policyholders who can't pay their premiums typically have a 60- to 90-day grace period to come up with the money, but permanent policyholders have more options.
"(Permanent policyholders) can take an 'automatic premium loan' and borrow against the cash value of the policy to pay the premiums," she says. "If you're going to borrow against the cash value, you'll want to ask what the loan rate is, and those are usually anywhere between 5 (percent) and 8 percent."
The added bonus of borrowing against your policy is you don't have to pay it back, but you should understand how borrowing against a cash value policy could affect your future returns and death benefit.