Interest due on borrowed policy question

Jul 7, 2019

  1. Deepsea
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    Deepsea Super Genius

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    I have a 10 pay policy in the 6th year. I borrowed out as much cash value as I could as I was thinking of surrendering the policy, and I borrowed over 99% of the cash value. The anniversary date isn’t until next February, when I will owe another annual premium. I figure there is no way that the policy makes it to the next anniversary as the loan interest has to be accumulating faster than the cash value is.

    Any chance that the interest due notice won’t come until the next premium is due.
    Because since I borrowed the money a month ago, I figure I have another month at most until there is nothing left in the policy.

    My question is would the insurance company wait until the anniversary date to bill me for the premium and interest on the loan ? Or will I get an interest due due bill to keep the policy InForce any day now ?

    Thanks
     
    Deepsea, Jul 7, 2019
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  2. rousemark
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    rousemark Still Here!

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    I doubt the interest is accumulating as fast as you think.. I have maxed out the loans on many policies and they have never lapsed that quickly.. However, without seeing he details of the policy is impossible to give you an accurate answer. You need to call your company's customer service department and they can tell what you want to know.
     
  3. pfg1
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    pfg1 Guru

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    If the policy premium is paid, nothing will be due until next anniversary. IDK what type of policy you have - when you say 10pay it makes me think WL. If so, you are forgetting that a 10pay earns interest also, so its possible that your accumulated money is enough to even keep the policy going after that time. Not sure why you planned to surrender it, but that typically is not a good idea. That is usually something that happens due to situation changing and not being able to fund, vs being planned.
     
    pfg1, Jul 8, 2019
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  4. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DHK, Jul 8, 2019
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  5. Deepsea
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    Deepsea Super Genius

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    Due to divorce it changed my plans. I used to be an agent with a mutual. 10 pay whole life. The policy was on my adult kid. I thought I could leave it to him when I die. I’m in my mid 50’s and he’s a young adult. I also had a bunch of 10 pays on myself. And also on my wife my now ex wife. My strategy going forward is to keep the polices on the exwife, until the day I die, and then they would go to my son if The ex is still alive.

    There won’t be any PHANTOM income tax, because my basis is more than the value of the policy + maybe one year or two of interest.
     
    Deepsea, Jul 9, 2019
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  6. Deepsea
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    Deepsea Super Genius

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    Thanks, that was the answer that I was looking for that possibly nothing would be due, or rather the interest wouldn’t be due until the next premium is due in February of next year. I thought maybe I would originally surrender the policy. Now I realize that for my situation he maximum loan might make more sense for now.

    Thanks !
     
    Deepsea, Jul 9, 2019
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  7. Lloyds of Lubbock
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    Lloyds of Lubbock Super Genius

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    Nice article until he said you borrow your own money
     
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