Five questions and five answers: What is the difference between the "borrowing" of life insurance and the "owing" of ordinary bank loans?

1. Policy holders can call their brokers or insurance companies directly and ask for part of the cash value of the policy.Some companies provide website application services, and some insurance companies will prepare a special withdrawal checkbook for customers;
2. After receiving the application, the insurance company determines whether there is enough money to pay the customer's "borrowing" application based on the specific situation of the customer's cash value account;
3. Once the corresponding department confirms that there is sufficient amount in the policy, it will immediately issue this check unconditionally;
4. The insurance company will put the part of the cash value lent by the customer, plus the interest generated, with a lien. The customer can choose to repay or not repay the loan. If not, it will be directly reflected in the amount of the insurance policy, which is the death claim. Gold reduction
5. After the client deposits the funds into his checking account, he can freely spend it;
6. At this time, the accumulation of cash value in the customer's insurance policy (including the part that has been lent, because the money does not really leave your policy), will continue to make profits and dividends;
7. If the customer decides to re-deposit the loaned principal or interest into the policy, the lien on the corresponding amount will be lifted;

Question XNUMX: Is the borrowing of the insurance policy better than the bank borrowing?

The borrowing interest of the insurance policy may not be the lowest, but it can be said to be the most private and flexible way of borrowing from your own insurance policy for the purpose of using borrowing to solve emergency needs, or for the purpose of protecting the privacy of family members.

The loan transaction records of the insurance policy will not be shown in any credit records, and for insurance companies, they guarantee that the loan must be provided unconditionally.In fact, since the insurance company still holds the cash value of the customer’s insurance policy as collateral, they are happy to provide this loan to the customer.

Question XNUMX: What is the repayment period of the loan?

From a technical perspective, borrowing from insurance policies is secured by death compensation.Therefore, the "term" of repayment is until the insured person passes away.When the insured person dies, the beneficiary will receive the cheque, which will be the death compensation, minus all borrowings and possible interest, the remaining amount.

It is also for the above reasons that insurance companies basically do not set any strict restrictions on borrowing.As long as the accumulated cash value exceeds the amount required to borrow, thenHow much to borrow, how long to borrow, and whether to repay the money is up to the policyholder himself.One more thing to remember is that even if the policyholder takes out part of the loan, the remaining cash value will continue to receive the income and the dividends promised by the insurance company.

6 ways to repay the policy

Unlike traditional commercial lending, policyholders have 6 options for "repayment":

1. Set up automatic repayment of principal and interest directly from the checking account
2. Set up interest-only repayment directly from the checking account
3. When you have spare money, write a check to the insurance company to repay the principal and/or interest
4. Let the interest of the borrowing roll up enough, and then use the interest to offset a certain amount of borrowing before repayment (this repayment method is very beneficial to real estate investors and contractors)
5. If the increase in cash value is enough to offset the interest on borrowing, you can choose not to repay
6. Deduct the loaned amount directly from the death claim amount

Although the method of borrowing money from the insurance policy gives the policyholder enough flexibility and tolerance, you will not want to kill the goose that will lay golden eggs. After all, time and compound interest are the most powerful tools.However, borrowing from the insurance policy can indeed solve the emergent needs of the following situations:

• Family members urgently need money;
• The business is in urgent need of capital turnover;
• The real estate investor finds an excellent investment house and is sure to make a profit when it is sold. At this time, some initial investment is needed to renovate it.

The money borrowed from the insurance policy can solve the urgent need, but after you have overcome the difficulties, you can choose to add the money back to the insurance policy in case you do not have sufficient funds when you need to borrow next time.

Question XNUMX: Why do I need to borrow money from the insurance policy?

You may ask, if the interest on the increase in my cash value is the same as the interest on borrowing, why should I borrow money from the policy?Why not directly withdraw the principal (withdraw)?

You can indeed take the cash value directly from the policy, but the following five points may make you think twice:

As mentioned earlier, time and compound interest combined are the most powerful tools, and this golden rule is again emphasized here.When you borrow the money, the cash value of the entire policy is still growing at compound interest. If you take out the cash value completely, you will lose the point you bought at the beginning, which is not cost-effective.

If you use your cash value as collateral and borrow from the insurance policy, you can still keep the starting point of your compound interest growth.

During this loan period, the policyholder will continue to have various benefits.In addition to death claims, there are variousAttached contract.For example, disability benefits,Terminal illness, Major injury,Major diseases和Chronic diseaseProtection.

In the case of additional agreed terms

A side contract, we are accustomed to call it a fringe benefit clause.How many items can your policy haveAttached contract, It mainly depends on the specific situation of your policy product.There are different benefit clauses, some of which are charged separately, and some are added to the policy clause for free.Due to the extreme asymmetry of market information and knowledge,We usually think that the more fringe benefits, the more expensive the price.However, iGA Insurance Academy’s community brokeragePolicy review in May 2020,But this concept was effectively broken.

Of course, you don’t need to enable these additional clauses for the best case.However, when you and your family are really in need, the cash that can be taken out of the insurance policy will solve many problems.When life insurance faces major changes in the family, the leverage it provides is unmatched by any other investment product.

If you want to know about your policy loan plan, you can make an appointment to get free service through the following methods :

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