Policy Loans: Overview | $50,000 Loan $100,000 CV | IBC Global, Inc
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- Опубликовано: 16 июл 2024
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00:05 Introduction to policy loans
01:17 Basic example: Dividend-paying whole life insurance policies
03:23 Getting to know more about insurance companies and benefits
05:24 Demonstrating how policy loan works
06:50 Know what is the impact of immediate growth and long term growth
08:51 Breakdown of how policy loans work
09:18 Always remember!
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DISCLAIMER:
All advice and/or opinions expressed in our videos are the result of our experience in the insurance and financial industries. Any action taken based on the information expressed in our videos is the sole responsibility of the viewer. All content produced by Steve Parisi and IBC Global Inc is made for informational purposes only.
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Great info! Thanks !! Very helpful and very well articulated!
Appreciate it! Thank you Cesar.
@@IBCGlobalInc you are welcome!
Just for clarification, the insurance company collateralizes the death benefit AND the cash value. That clarification can help people understand that their accumulated cash value doesn’t actually decrease, since they aren’t borrowing their own money.
My insurance only allows you to take money from the cash value. Not for the death benefits
@@christianm4450 yeah, in most cases you can only borrow from the cash value, but it collateralizes the CV and the death benefit. Living benefit riders give the opportunity to borrow from the death benefit, above and beyond the cash value.
So i can still take a loan from my insurance outside my CV? I don’t know what to say.
@@christianm4450 only if you qualify for the use of a living benefit rider.
@@OregonCashFlowPro i just called my insurance company today. I got denied for loans outside my CV.. i was thinking to cancel it and take a better one..
What am I missing. They borrowed $200k and repaid $228k, but have the same cash value. So pretty costly to borrow from the policy it seems.
Amazing info .
In my experience, the dividend rate of 6% is not the actually IRR (at least not until your premiums are completely paid). I'm at year 5/15 and my WL policy seems to have a 3% dividend rate. Finally got a positive IRR this year as well.
Thank you for the cmment! We 100% Agree. Below is a video that provides information on dividend rates and IRR.
- ruclips.net/video/FdY1SdU-1go/видео.html
And the premiums will keep going up!
Hey Steve, How should you go about paying a loan on a VUL policy? Would it be better to make a lump sum payment when the market is lower since it is base on the funds in the contract? Any suggestions? Thanks Lance
Good question. I cannot comment or give advice on variable products, but I'd recommend anyone pay a loan off by a lump sum payment in order to lessen the interest expense.
Hey Steve, thanks for the video, great info.
I live in London UK and have been interested on the life insurance for a while now but been looking into insurance companies but I have not seen any that does whole life insurance with life benefits. Would you be able to recommend any insurance company in UK that have whole life with life benefits if you know any please. Thanks in advance.
Hi Stella, thanks for the comment! Unfortunately this is out of my area of focus. I am not familiar with insurance companies in the UK and the tax laws. We work with individuals who reside in other countries but have established some type of citizenship in the U.S. as they'll use a U.S. company.
So in the illustration am I correct that the policy loan interest rate does not really matter as the added interest amount eventually just goes back to catching up your cash value and death benefit you would have by leaving your policy alone?
I’m new to this.. what if a person chooses to not pay back the “loan” which is basically just you using your own money.. how would that play out if a person simply made some basic premium amounts into this each month?
So can I use the cash value to make payments on the loan I borrowed on my WLI policy?
Goooood question. This is possible as dividends can be used to pay a policy loan. We want to make sure a MEC does not occur, but yes, it is possible
@@IBCGlobalInc can i use dividend to pay premium or just withdraw it every year? Thanks
I would like to know more about the ways people are typically paying back the policy loans and what theyre using them for. Are most examples assuming the policy loans are used for a profitable investment?
It can be used for cars, houses, college tuition, vacations and everything else that you buy of a reasonable cost. The eventual goal is for your income to equal your premium payment. This takes a long-time but that's the goal.
@@maxpruger837 I guess what I'm talking about is this. The idea of good debt is to use leverage on profitable investments so that the debt essentially pays itself off. The true power of the IBC using whole life is that you can put money into an accelerated savings account and not lose the opportunity cost of missing out on these other investments. Thats great but what if someone uses the policy loans for short term things like a car or vacation? Yes the policy is a lot more flexible than typically lenders but bad debt is still bad debt regardless of the lender correct? So how does someone using it for this purpose typically go about paying back that policy loan?
@@lobangelesclippers you are seeking answers to individual decisions. Everyone would have a different answer.
All policy loans don’t pay higher dividend rates than the loan rate. Companies would be losing money. Which company is this?
Thanks for the comment! MassMutual (Fixed loan rate), Guardian, and Northwestern Mutual have raised dividends on loaned funds. The start date of the policy makes a difference in this case. I've included some videos that provide more information on this.
- ruclips.net/video/bc06nEX24ck/видео.html
- ruclips.net/video/LszDNKuTt8E/видео.html
- ruclips.net/video/fWABJkx1Rgs/видео.html
- ruclips.net/video/_3Fx3hroKbQ/видео.html
- ruclips.net/video/SM50N2WBp5A/видео.html
- ruclips.net/video/HjFFpaGWSSM/видео.html
What if u have no cash value and you just opened the whole life.. can you borrow from the db?
Good question. No, we can borrow from the death benefit. The death benefit is collateralized when policy loans are taken, but the amount we can loan is always based on our cash value.
Great video! Curious , Dave Ramsey says that dividends are actually over payments and not actually a gain even per the IRS rules . He is saying these policies are a scam .. can you clarify the dividend ?
Thank you! Dave is correct that the IRS definition of life insurance dividends is a return of overpaid premiums.
With that said, that allows the product to maintain favorable tax status. The IRS will still tax a policyholder on the gains if the policy is surrendered with a gain. Example:
- Cost basis (total payments): $100,000
- Cash Value: $200,000.
- Policy canceled - Gain of $100,000.
- Gains are taxed as ordinary income.
@@IBCGlobalInc awesome, Thanks for the reply!
What happens if the policy holder passes with 100k in cash value 500k death benefit
A 500k death benefit is paid out to the policyholders beneficiaries.
what happens if you don't have 100k in cash value only 1,000 but wants to borrow 50k? is that possible?
Good question. We can only borrow what is available in cash value.
Do you have any videos on collateral assignment
Yes! Several! See below.
- ruclips.net/video/l21hSBHPDB4/видео.html
- ruclips.net/video/XNJ4w2dFkCQ/видео.html
- ruclips.net/video/ec9-6dBSbtc/видео.html
Can the cash value be taken out tax-free for retirement income?.....
Good question. You can draw the cash value tax-free, but it is possible that taxes can occur. I've included a few videos below.
- ruclips.net/video/J0nT1m15NvI/видео.html
- ruclips.net/video/i5ITdAata7o/видео.html
- ruclips.net/video/1qodgDQA7Qg/видео.html
Why does the death benefit of the policy with untouched cash value start to decrease and then increase again ?
Good question. We will often illustrate removing a term rider and a reduced paid-up option. This is a method to reduce policy expenses, which often reduce the death benefit, and maximize cash value growth while no longer making payments.
I hope fee charge and increase life insurance cost , don’t take all my cash
That 5% loan ended up being being an about 13% loan
its defintely higher, nothing simple about that interest
Why does the death benefit goes down over time, then goes back up?
Hi Latoya, in addition to the loans, we also removed a term rider after year 7, and reduced the death benefit in year 11 to optimize cash value
Steve Parisi..got it! This is setup in the initial policy design?
@@steveparisi4120 can u please do a video on how policy loan account for cost basis of insurance
Nice explanation, but didn't say WHY is works that way
Thanks Dail, we can create content on the WHY. Thanks for pointing it out! :)
So you can only take a loan out on the money you've put in? Doesn't that make it a savings account with benefits?
Thanks for the comment. Some have expressed that it feels similar to a savings account with benefits. You may loan the money you've paid in, and any gains. I've included a video below.
- ruclips.net/video/7Iu3vjVZ7Vs/видео.html
How can I purchase PUA Rider insurance
It depends on the insurance company and product, but you will want to request that it be added to your policy.
1:25 2:40 5:35
How is it a loan if it’s your own money ?
Hi Wanya, good question. Technically, we borrow against the policy. Our cash value would be considered the "equity" we have access to. I've included a couple recent videos on the topic of loans.
- ruclips.net/video/dKVGYCSvvmk/видео.html
- ruclips.net/video/ocD-SOCbY6Q/видео.html
@@IBCGlobalInc lol thanks I ended watching like 6 videos since and learned that .
How do you become a affiliate
Thanks for the comment! We offer an Agent Training Program. This is for licensed agents.
If one is looking to receive compensation for referring people to start policies (receive a commission), the affiliate would need to have a life insurance license.
If you draw another line on that board you could give John Madden a run for his money.
Cash value, it client money ???
Yes. The cash value is money the policyholder has access to. Below is a video that may be helpful.
- ruclips.net/video/vfeckLbG9Nk/видео.html
What happen after death insurance policy expire after 80,
Where the cash value go.. what would happen to cash value your saving???
If they don’t pay back loan!!!!
Correct. Loans do not have to be repaid in all cases. See below.
- ruclips.net/video/muA6mMY2d9E/видео.html