BORROWING
Access your cash value tax-free2 for any reason while it continues to work for you in your policy.
Just like you can take out a mortgage on your house, your life insurance policy can be used as a security for a low interest rate loan.
In this way, you can use the money you have accumulated within your policy without having to withdraw it, pay taxes on gains, or lose out on future growth.
Loans can be used to finance things like real estate, a trading account, or perhaps a startup. Just make sure that the returns of your investments are higher than the interest on the loans and you’ll be on your way to building an empire.
Use your loans to finance your lifestyle, retirement, or anything you want to spoil yourself or your loved ones with.
Just like a foreclosure can occur with a house, your life insurance can be cancelled if your loan balance gets too high compared to your cash value. If this happens, you may lose your coverage and gains in the policy could be taxed.
To reduce this risk, make sure that you have the ability to pay back your loan - either from cash flow, savings, or investments.
If you have a net worth of at least $5m and are planning on a cash value life insurance premium of $100k or more, we can help you leverage your premium payments via loans, which could allow you to achieve higher rates of return.2
1: Accessing cash value through policy loans may be done on a tax-free basis under most circumstances. Excessive loaning, lower than expected performance of the policy, and/or increased charges may require you to limit the policy or pay loan interest and/or premium payments to prevent the policy from lapsing.
2: All growth rates applies to the cash value of permanent life insurance policies, and every dollar spent on insurance premium will not go towards the cash value. Depending on individual preferences policies can be designed with different amounts going towards the cash value, which is explained in this article. Whole and indexed universal life insurance are not registered investment products and past performance is no guarantee of future results.
3: Premium financing adds complexity to the life insurance policy. Loans are typically secured using outside collateral when required.
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