Sentences with phrase «life insurance loan rescue»

Notably, amongst life insurance agents, the strategy of replacing a life insurance policy with a loan for another one is the primary approach to execute a life insurance loan rescue... in part because the life insurance agent often has an opportunity for a substantial commission on the replacement policy.

Instead, it is necessary to specifically request a version of the life insurance policy that can accept an incoming loan — which at many companies, are dubbed «life insurance loan rescue policies» because they are used for this exact purpose.

What life insurance loan rescue strategies have you found most useful?

A life insurance loan rescue plan (or «life insurance rescue» for short) is a way to describe various strategies that aim to avoid the tax consequences of lapsing life insurance due to a policy loan, ideally while maintaining at least some of the life insurance death benefit as well.

Companies ranging from Genworth to Zurich, and Voya to Lincoln, all have life insurance loan rescue policies available.

Not exact matches

Have you had to help a client rescue a life insurance policy with a sizable loan?

If a replacement policy loan rescue is being contemplated, though, it's crucial to still thoroughly vet the replacement policy itself — most notably, regarding how the life insurance cash value will be invested, and whether it's being illustrated at an appropriate rate or not.

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).

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!

But fortunately, it's often feasible to sustain the policy with some combination of restructuring the policy's dividends and death benefit, engaging in partial surrenders or withdrawals, contributing some additional dollars into the policy (either as premiums, or to pay loan interest or repay principal), or even exchanging to a new «life insurance rescue policy» that transfers the policy's cash value — along with the loan itself — in a tax - free 1035 exchange.

In fact, the reality that the only way to use a life insurance policy's cash value to repay a loan tax - free is via the death benefit leads to a number of «rescue» strategies for life insurance policies with substantial loans, specifically to help ensure that the policy remains in place until the death of the insured.

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.

Notably, an important caveat of doing a 1035 tax - free exchange to rescue the old life insurance policy with a loan is that it's essential that the new policy still take on an identical loan.