Wednesday, August 14, 2013

A Few Reasons To Borrow From A Whole Life Policy Vs. The Bank

Here are 3 reasons to borrow from the insurance company against your Whole Life policy versus borrowing from a bank are: 

* No application process. I ask for the money and I get it. I don't have to qualify. 

* Instant liquidity of repayments. Every dollar I repay on my policy loan is instantly available to be borrowed again without application or qualification, as opposed to a bank loan where payments simply reduce the unpaid principal balance. 

One huge reason for borrowing against your life insurance policy is the flexibility of the repayment plan. 

Even if you set up an interest only repayment plan but do it on a monthly basis you will actually amortize the principal because the LI Company charges simple interest and applies your monthly "interest only" payment to principal. 

* Privacy. A bank customers "audit trail" is too easily available to the government and courts for my liking. What I do with my money - as long as it's legal - is none of their business.

Total control is in the hands of the policy owner.  You decide how much and when you pay back the loan.  For best results, don't "steal" (borrow without setting up a payment schedule) from yourself.  Maintain discipline.  Paying back your loan re-capitalizes the policy for future use.