If you are the owner of the life insurance policy and the policy has a cash value you can borrow from a life insurance policy.
You simply have to contact the insurance company and request a loan.
There are some consideration you should be aware of including:
If you borrow and do not pay the interest on the loan it compounds and could put the policy at risk of lapsing.
In Canada borrowing from the policy could trigger a taxable policy gain. If you borrow from a bank using the policy as collateral, no taxable policy gain is triggered.
You should discuss options with you insurance advisor, to ensure you are informed.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
That is an excellent question! One of the biggest perks of having a whole life policy is that it gives you the opportunity to borrow cash without having to jump through the hurdles that a bank or lender might make you do. The only requirements are: That it is a whole life policy (term policies do not have a cash feature) that has been active for awhile (it generally takes two to three years to start accumulating any measurable amount of cash) and that you are the owner of the policy. Please contact your agent, and find out if there are any fees attached to your loan, and how the loan will affect your policy. In some cases, you may be able to repay it slowly, in others you may not need to repay it at all; in some cases not paying it back can cause your policy to end. Check first, okay? Thanks for asking!
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
You can only borrow money from a life insurance policy if it's a policy that builds cash value - a permanent life insurance program. Permanent life insurance includes both Universal and Whole life insurance programs. Term life insurance does not build cash value and therefore there's nothing to borrow from.
The maximum amount you can borrow is up to the current surrender or loan value cited in the policy at the time you want to borrow from the cash value.
Keep in mind, when you borrow money from the cash value, you are creating a loan against the policy (the funds are expected to be paid back and, much like you do when borrowing from a bank, an interest rate is being charged on the borrowed monies). If the insured dies with an outstanding loan, the carrier will deduct the outstanding amount and any interest charges from the death benefit and give the difference to the beneficiary.
Consult with your agent before borrowing from the cash value to find out what will happen when you create a loan against the policy and what you're responsible for.
Please feel free to contact me for help or if you have any other questions. Thanks very much.
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You simply have to contact the insurance company and request a loan.
There are some consideration you should be aware of including:
If you borrow and do not pay the interest on the loan it compounds and could put the policy at risk of lapsing.
In Canada borrowing from the policy could trigger a taxable policy gain. If you borrow from a bank using the policy as collateral, no taxable policy gain is triggered.
You should discuss options with you insurance advisor, to ensure you are informed.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
The maximum amount you can borrow is up to the current surrender or loan value cited in the policy at the time you want to borrow from the cash value.
Keep in mind, when you borrow money from the cash value, you are creating a loan against the policy (the funds are expected to be paid back and, much like you do when borrowing from a bank, an interest rate is being charged on the borrowed monies). If the insured dies with an outstanding loan, the carrier will deduct the outstanding amount and any interest charges from the death benefit and give the difference to the beneficiary.
Consult with your agent before borrowing from the cash value to find out what will happen when you create a loan against the policy and what you're responsible for.
Please feel free to contact me for help or if you have any other questions. Thanks very much.