You may borrow from any policy that has cash value however your best bet is to purchase a policy from a
company that welcomes it. Please read Bank on Yourself
The size of a cash buildup differs substantially from company to company. In many instances there is no correlation between the size of the cash value and premiums paid; in some cases there is an inverse relationship. Everything that the policyowner wishes to do with this policy while living is determined by the size of the cash value. For example, at some future time, a policyowner may wish to convert the cash value to a monthly retirement income. Its size will depend on (1) the amount of the cash value and (2) the attained age of the policy owner.
Enrolled Agent-licensed to practice before the IRS, Samuel N Smith, EA, South Carolina
Aren't you defeating the purpose of life insurance if you borrow on the "cash value". You do have to repay the loan. Are you familiar with :first in-last out, or Last in first out"> How does the insurance company treat the disbursement for tax purposes? I realize we are living in hard times and some of us are forced to do things we would not ordinarily do because of the economic conditions. Pulling money out of a life insurance policy is much more than "I am borrowing money from my life insurance policy"? How will you repay it? How soon will you repay it?
There two seemingly easy ways to borrow money-borrow from yuor 401k and borrow from your life insurance. Bot ways can get you in trouble and cause tax problems you certainly do not need
The only type of life insurance that you can borrow from is Universal Life or Whole Life. You cannot borrow from Term Life.
There are many types of Universal Life and Whole Life, and especially with Universal Life, some policies will have very little cash value. If you are purchasing a Universal Life policy for the purpose of borrowing from it, you will do best with Indexed Universal Life or Variable Universal Life.
Solution Provider, Madison Strategic Partners Group, Greater New York City Located, Serving Clients Nationwide
Are you concerned about borrowing against an existing life insurance policy that you own? Or rather are you exploring all of the potential uses of a potential policy purchase?
Depending on your age, you may qualify for a life settlement. This is a transaction in which the policy owner sells their interest in the policy to an investor through a life settlement provider. The policy owner would receive multiples of the policy's current cash value. However, a life settlement is a sale of the policy and just as if you sold your car, you no longer have an interest in the policy.
In instances of cash crunches or reduced income causing a strain to pay premiums, you can always work with your agent to reduce the death benefit of the policy, work with a life settlement professional to sell your existing policy and use the proceeds to purchase paid up coverage or discuss the issue with your beneficiaries, who may have an interest in taking over the premiums in order to preserve the full death benefit.
President, Lane Independent Agency, Southern California
New York Life's Whole Life Policies allow the owner to borrow against their policy after the first 2-3 years. It does not need to be repaid and may be kept tax free, although this would decrease the death benefit.
Licensed Life Agent, Life and Finance/ 50 States, New York
Well as there is a cash value accumulation to your Life Insurance policy. You may borrow as cash interests is compounded. Depending on your company rates are usually higher or lower than others. You may borrow from a Universal Life Policy, Whole Life Policy, Modified Endowment which is like a security policy that gains interest and is tax free. Its best to let the money accumulate and money borrowed from any life policy will be deducted from benefits to beneficiary if unpaid.
.JPG){kind=avatar}
company that welcomes it. Please read Bank on Yourself
The size of a cash buildup differs substantially from company to company. In many instances there is no correlation between the size of the cash value and premiums paid; in some cases there is an inverse relationship. Everything that the policyowner wishes to do with this policy while living is determined by the size of the cash value. For example, at some future time, a policyowner may wish to convert the cash value to a monthly retirement income. Its size will depend on (1) the amount of the cash value and (2) the attained age of the policy owner.
There two seemingly easy ways to borrow money-borrow from yuor 401k and borrow from your life insurance. Bot ways can get you in trouble and cause tax problems you certainly do not need
There are many types of Universal Life and Whole Life, and especially with Universal Life, some policies will have very little cash value. If you are purchasing a Universal Life policy for the purpose of borrowing from it, you will do best with Indexed Universal Life or Variable Universal Life.
Depending on your age, you may qualify for a life settlement. This is a transaction in which the policy owner sells their interest in the policy to an investor through a life settlement provider. The policy owner would receive multiples of the policy's current cash value. However, a life settlement is a sale of the policy and just as if you sold your car, you no longer have an interest in the policy.
In instances of cash crunches or reduced income causing a strain to pay premiums, you can always work with your agent to reduce the death benefit of the policy, work with a life settlement professional to sell your existing policy and use the proceeds to purchase paid up coverage or discuss the issue with your beneficiaries, who may have an interest in taking over the premiums in order to preserve the full death benefit.
Feel free to contact me at JNugent@MadisonPartnersNY.com if you would like to learn more about life settlements.