Not logged in? Join one of the largest Insurance Forums on the Internet! Join Now!   Latest blog post: Man Busted Selling Fake Insurance Policies!

Advertisments:


Sponsor Links

Affordable Pet Insurance
Travel Insurance Comparison


Disadvantages of Borrowing out of life insurance policy?

Term Life Insurance & Whole Life Insurance Discussion

Disadvantages of Borrowing out of life insurance policy?

Postby kenley » Tue Aug 21, 2012 11:59 pm

as per topic,and i am most concerned about would it reduce my projected cash bonus,terminal bonus or surrender value,thanks
kenley
 
Posts: 477
Joined: Fri Apr 01, 2011 3:00 pm

Disadvantages of Borrowing out of life insurance policy?

Postby mardon31 » Wed Aug 22, 2012 12:01 am

as per topic,and i am most concerned about would it reduce my projected cash bonus,terminal bonus or surrender value,thanks
It all depends on how you will be borrowing this money...

I am a licensed agent and my focus is on life insurances. If you decide that you wanted to get some money from you policy it would be best to take a withdrawal instead of a loan.

a withdrawal will take away from your cash value in the policy and will not affect your policy duration or death benefit. the loan on the other hand will. some people think that they can take the loan and never pay it back and just have it deducted from the death benefit paid to the beneficiary. but what ends up happening when you take the loan out is that you accrue interest and it starts eating away at the duration of your policy. So if you have a policy illustrated to the age of 95 and take a loan out and not pay it back, you could be shortening your policy to the age of 70.

If you really need the money, take it as a withdrawal, not a loan.
mardon31
 
Posts: 423
Joined: Thu Mar 31, 2011 3:20 pm

Disadvantages of Borrowing out of life insurance policy?

Postby dougald » Wed Aug 22, 2012 12:03 am

If you take out the cash value as a loan OR make a withdraw of the cash value, they BOTH reduce your death benefit. If you have dividends, make a dividend withdrawal which will not effect the cash value or the death benefit.

You can take a loan against the cash value if your policy is a whole life policy. You can take a withdrawal of the cash value IF your policy is a universal life policy. So, it depends on what kind of policy you have. A dividend withdrawal is best if you have dividends.

Either way you withdrawal cash value, loan or withdrawal it effects your death benefit.
dougald
 
Posts: 175
Joined: Sun Jul 08, 2012 11:34 pm


Return to Life Insurance

 


  • Related topics
    Replies
    Views
    Last post