A life insurance loan often refers to borrowing from an insurance company using the cash value of the policy as collateral. The percentage of the policy's cash value you can borrow varies by type of policy, but can be as much as 90%. It is important to pay the interest on the loan, otherwise the compounding could put the policy at risk of lapsing.
In Canada, if you borrow in excess of the adjusted cost base of the policy, it is a taxable event. Should you repay the loan, you receive a tax credit. If you borrow from a bank using the policy as collateral it does not trigger a taxable event.
If you have further question, or feel I could be assistance, please do not hesitate to contact me.
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In Canada, if you borrow in excess of the adjusted cost base of the policy, it is a taxable event. Should you repay the loan, you receive a tax credit. If you borrow from a bank using the policy as collateral it does not trigger a taxable event.
If you have further question, or feel I could be assistance, please do not hesitate to contact me.