All Life Insurance Tips

Whole Life Insurance?

So I read on bankrate.com that one can borrow against their life insurance (whole life insurance) policy to pay off debts. This sounds like something I may be interested in. How long do you need to hold your policy before you can borrow the funds. (EX if I purchase a 125k policy and need to borrow 30k)

Public Comments

1. The 125 is the policy amount...you have to check the savings amount on the policy...it varies.
2. Never, Never, Never buy whole life policies. It is a huge waste of money. Please do research on the subject before you buy. Take your money and invest it.
3. You can borrow against both whole life and universal life. However, it doesn't matter if the face value of the policy is 125 thousand or 125 million you don't borrow against the face amount. You borrow against the cash account within the life policy. The cash account comes from the monthly premium that you pay and interest. As you pay the premium some of the money goes for the insurance, some goes to pay administration and other fees and some goes into the cash account. For example, say your premium is $200 per month and $180 of that goes into the cash account. This is the amount you can borrow against. But you can only borrow a certain percentage (which is different with different companies). So if the policy states that you can borrow 50% of the cash account then you need to put 60K into the cash account to borrow 30K. I never say never buy a whole life policy because it does have it's place but seldom would someone benefit from whole life. However, never buy a life policy for investment purposes or to borrow against.
4. Whole life insurance is fantastic......ONLY WHEN IT IS BOUGHT FROM THE RIGHT COMPANY....these policies should only be bought from either.....Northwestern Mutual, NY Life or Mass Mutual. The reader above who mentioned for u to buy term and invest the difference. He is absolutely right, only when comparing market rates to dividends rates of those companies NOT mentioned above. You should put 3-7% of your gross income into whole life insurace from one of those three companies only, particularly Northwestern Mutual. To answer your question, you can borrow from your policy any time you want, as long as there is enough money in it to keep the policy going. Talk to your agent and they can illustrate this for you. Just make sure to pay it back... By the way, never buy universal insurace (Northwestern Mutual, the bentley of all life insurance companies, does not even offer this) is is a risky proposition and is ridiculously set up to gouge your monies. Hope this helps. www.nmfn.com
5. I agree with the 2 answers on top... but nmfn is kinda high end. here in the US, 2% are considered poor(people living on streets) 3% are extremely rich, and 95% are average, which we call MIDDLE AMERICA. if you belong in the 95%, then you should check out Western Reserve Life. email me if you have further questions.
6. You can only borrow up to the "cash value" of the policy. Cash value is about 10% of what you've paid into it. If you're paying about $3,000 a year, if you haven't held it at least 5 years, you don't have any cash value, most likely. To borrow $30,000, you have to HAVE $30,000 of cash value, which means you must have held it about 15 - 20 years. You can't borrow off the payout amount, ONLY the cash value. Call your insurance company to see how much the cash value of YOUR policy is.