By: Tim Wilhoit

Tim Wilhoit — Thu, 24 Jul 2014 22:20:14 +0000

First off you must have a cash value life insurance plan. It cannot be a term life insurance, because those do not accrue cash value. Be sure you have a whole life, universal life, indexed universal life or variable life insurance policy. Typically the first 5 to 7 years the premiums are used to pay for the cost of insurance. After that period is satisfied, the policy will accumulate cash value which you may borrow. Locate the illustrations page of your policy to see the cash value amounts.

By: David Racich

David Racich — Sun, 12 May 2013 14:05:43 +0000

Assuming you have cash values and the surrender charge provisions allow policy loans during the surrender period, access to cash values are fairly straight forward. What’s not straight forward nor is there any real industry standard in the charges for borrowing your money from your policy. The following current company practice of policy loan charges may be in your contract: (These are basic explanations. Each policy uses different language to express its provisions)

Zero net cost loans – the charging and crediting of the same rate 31 days apart
Wash loans – the charging and crediting of the same rate 365 day apart
Spread loans – the charging and crediting of a different rate 365 days apart
Direct recognition loans - the charging and crediting of a different rate 365 days apart as well as lower of the dividend credited to borrowed cash values.
Participating loans - the charging and crediting of a different rate 365 days apart where the policy earnings are greater than the policy loans.

New answer on: When Can You Borrow Against Life Insurance?

By: Tim Wilhoit

By: David Racich