Sentences with phrase «insurance policy loan»

A life insurance policy loan is just that: a loan from the insurer in which the cash value of your policy is used as collateral.

The fact that a life insurance policy loan is really just a personal loan for which the life insurance policy is collateral also explains why the lapse or surrender of an insurance policy with a loan can trigger a taxable event.

When this happens, if a cash value life insurance policy was used to fund a key person policy, the amount of the cash value can be taken out in the form of an easily accessible life insurance policy loan, with no origination costs, tax free.

In reality, though, the «tax - favored» treatment of a life insurance policy loan is not actually unique or specific to life insurance.

However, the situation is far more problematic in scenarios where the balance of the life insurance policy loan is approaching the cash value, or in the extreme actually equals the total cash value of the policy — the point at which the life insurance company will force the policy to lapse (so the insurance company can ensure full repayment before the loan collateral goes «underwater»).

From the tax perspective, though, the repayment of a life insurance policy loan from the death benefit of the policy is tax - free, because the payment of a death benefit itself (by reason of the death of the insured) is tax - free in the first place.

In this context, the reality is still that the life insurance policy loan itself has nothing directly to do with the taxation of the transaction.

Of course, ideally the insurance policy will be monitored all along, to avoid ever reaching a «surprise» situation where a life insurance policy loan has compounded to the point that it needs to be rescued.

In point of fact, this is why any form of life insurance policy loan is shown as a «reduction'to the death benefit of the policy.

Accordingly, the cash from a life insurance policy loan is not taxable when received, because no loan is taxable when you simply borrow some money!

A bank might restrict how you can apply the loan proceeds, but an insurance policy loan has no such limitations.

In the preceding example, the presence of the life insurance policy loan reduced the net cash value received when the policy was surrendered, even though it didn't impact the tax consequences of the surrender.

In other words, technically when a life insurance policy loan occurs, the death benefit is not actually reduced (which means the cost - of - insurance charges don't decline for any reduction in the amount - at - risk to the insurance company); instead, the insurance company simply recognizes that any final death benefit to be paid will be reduced first by the repayment of the loan balance.

The bottom line, though, is simply this: in the end, a life insurance policy loan is really nothing more than a personal loan from a life insurance company, for which the cash value of the life insurance serves as collateral for the loan.

Just as it's not taxable to receive a credit card cash advance, or a business loan, or the cash from a cash - out refinance, a life insurance policy loan is not taxable because it's simply the receipt of a personal loan.

But taking steps to engage in a life insurance policy loan rescue can at least potentially ensure that a depleting cash value doesn't turn into a forced policy lapse, and a big income tax liability as well!

The first approach for a life insurance policy loan rescue is to restructure the policy and its key components, in an effort to help the policy survive longer (i.e., until the insured dies and the policy loan can be repaid tax - free from the death benefit).

Because, again, a life insurance policy loan is really nothing more than a personal loan from the life insurance company to the policyowner, for which the policy's cash value is simply collateral for the loan.

However, in reality the tax - free treatment of a life insurance policy loan is not actually a preference for life insurance under the tax code, but the simple recognition that ultimately a policy loan is just a personal loan between the life insurance company and the policyowner, for which the life insurance cash value is collateral.

You can take out a tax free life insurance policy loan by using your cash value as collateral.

Consider speaking with an insurance adviser or a financial planner before applying for an insurance policy loan.

Whole life offers (1) cash value is liquid, creating cash flow, (2) income tax advantages, (3) the ability to borrow against it as collateral through a life insurance policy loan and (4) the cash value grows exponentially due to true compound interest.

It is important to note here, though, that even though a life insurance policy loan is not required to be repaid, if the insured dies while there is still a balance outstanding, the amount of this balance — plus interest — will be subtracted from the total amount of death benefit proceeds that are paid out to the beneficiary.

Another way that one may access the bucks is by the utilization of an insurance policy loan.

With a life insurance policy loan, however, interest on that loan is normally paid out of the remaining cash value (charged to the cash value) when you die.

A life insurance policy loan can be used for any purpose and paid back whenever you decide.

Unlike a conventional loan from a bank or credit union, you are not required to pay back a life insurance policy loan.

And you never have to pay the life insurance policy loan back, although it is a good idea to pay it back, with interest, when practicing infinite banking.

The difference with permanent life insurance is that withdrawals are NEVER required, and thus the tax free growth may never be taxed, and even if proceeds are taken in the form of a life insurance policy loan, these proceeds aren't taxed either.

When this happens, if a cash value life insurance policy was used to fund a key person policy, the amount of the cash value can be taken out in the form of an easily accessible life insurance policy loan, with no origination costs, tax free.

And don't forget that you can also access the growth of your account tax - free, by taking a life insurance policy loan (sometimes called a swap loan) against your cash value.

A life insurance policy loan is just a loan from the insurer in which the cash value of your policy is used as collateral.

Getting a life insurance policy loan is quick and easy.

A life insurance policy loan is just a loan from the insurer in which the cash value of your policy is used as collateral.

401 (k) loans or life insurance policy loans: Using these types of loans may help you pay off your debt, but they may create other financial issues.

Like it fellow mutual companies New York Life and MassMutual, AUL practices a non-direct recognition approach to life insurance policy loans.

Life insurance policy loans are a unique way in which many policy holders access their cash value without incurring any tax hit.

They know that they can fall back on readily available life insurance policy loans to fund their daughter Jesse's college education and, after conducting extensive research, they also know that this planning approach is superior to the vigorously touted 529 plan.

To be sure, the tax advantages combined with the availability of life insurance policy loans to fund various needs and ventures presents an attractive option for policy holders.

Whole life insurance policy loans tend to have low interest rates and, since there's no credit check or eligibility requirement, you can get the money almost immediately.

Ameritas practices a direct recognition approach to life insurance policy loans.

Life insurance policy loans allow access to your policy's cash value.

In general, life insurance policy cash value can be used to supercharge the life insurance policy through paid up additions AND the cash can later be freely utilized to take advantage of other investments through life insurance policy loans, allowing for maximum financial leverage and the velocity of money.

Like life insurance policy loans, loans secured by annuity cash value do not have to be repaid, and this means that they are subject to taxation just like any other «discretionary» distribution that is by definition NOT an annuitized payment.

Life insurance policy loans are not taxable.

In addition, life insurance policy loans that are taken from a cash value life insurance policy will also likely have associated administrative costs and other fees.

The life insurance policy loans are convenient, as mentioned above, but they are also tax - free.

If you buy the right insurance policy loans, debts with respect to credit cards and personal loans will be taken care of.

Further, the cash value in your policy can be accessed tax free through life insurance policy loans.

Cash Value Life Insurance is a tremendous asset and a great way to remove the tax burden that eats into so many retirement accounts, but what if the government changes the laws regarding life insurance policy loans.