If I borrow against the value of my life insurance policy, how do I pay it back and how long do I have to pay it back?
Answers | 2
This is a great question. We need to keep in mind that this is a loan and the insurance company charges interest. With that said, a policy loan can be paid in full or in part at any time. If no payments are made when one is alive, then at death the balance of the loan will be deducted from what is paid to those who were named as the beneficiaries. It is important to note that when repaying a policy loan to indicate that the payment is for repayment of the loan, otherwise it could be treated as a premium payment. Is is always wise to consult with the insurance agent about the specific insurance company's repayment requirements.
A loan against a life insurance policy is an unstructured loan. That simply means you pay it back in whatever manner you want. If can chose to make a payment one month, or not, and your payment can be as much or as little as you want. I would strongly recommend you speak with an insurance professional who can go over your policy with you and map out a strategy that makes sense for your situation.