How to Use Life Insurance to Build Wealth
How Policy Loans Help Build Wealth
To take a policy loan, all you do is request it from your insurer. Most insurers allow you to borrow up to 90% of your cash value. These loans do incur a small amount of interest, but it’s offset by the interest your cash value continues to earn. It’s a private loan, so it will never appear on a credit report. And although it’s called a loan and is intended to be repaid, you technically don’t have to. If you don’t repay a loan, you’ll continue to accrue interest charges.
If a policy loan is outstanding when you pass away, the insurer will deduct what you owe from the death benefit before it gets paid to your beneficiary(ies). If your beneficiaries truly need that death benefit, you have to evaluate the pros and cons of leaving a loan unpaid.
When you take out a policy loan, you’re not removing that money from your cash value account. That’s the key to building wealth. That cash value continues to compound and earn interest even while you’re using its equivalent to make more money out in the world.
Entrepreneurs and investors use policy loans to make short-term investments. The goal is to make more money than you used in the policy loan, and pay it back with a portion of your profits. There are no restrictions how that loan money can be used. You can use it to invest, to start a business, or for any other reason you see fit.
Rather talk to a real person about how you can use policy loans to build wealth? Call us at (800) 521-7873 and we’ll answer all your questions. Or start comparison shopping with a free term life quote – just click the button below!
