VUL Loan Question

[lovin the job]

I have a client with a vul that she has had before me. It has $25,000 in cash value. She needs money for home repairs and wants to tap into the policy for about $22,000. She called the company and was told that $11,500 of the money is oversees but its all available tax free and its a $300 fee to access whatever she wants. If she continues to make the same premium payment how much can she withdraw?

 

[Norwayguy]

I have a client with a vul that she has had before me. It has $25,000 in cash value. She needs money for home repairs and wants to tap into the policy for about $22,000. She called the company and was told that $11,500 of the money is oversees but its all available tax free and its a $300 fee to access whatever she wants. If she continues to make the same premium payment how much can she withdraw?

Wouldn't that have been a good question to ask the carrier?

 

[lovin the job]

That's the problem. She hasn't heard from the guy that sold this to her in 8 years. I wanted to take a look at her year end statement and give her the right advice. She is meeting with an architect today and wants to know if this money will be the best way to go.

 

[VolAgent]

The only way to answer your question is to ask the carrier. Have them run illustrations at conservative growth and see what happens if she borrows the money and continues to pay the premium, stops paying the premium and increases the premium to repay the loan.

I doubt the policy will survive long at current premium, but there is only one way to find out.

 

[Norwayguy]

That's the problem. She hasn't heard from the guy that sold this to her in 8 years. I wanted to take a look at her year end statement and give her the right advice. She is meeting with an architect today and wants to know if this money will be the best way to go.

Don't call the agent even if he is still in the business as your just asking for him to come in and muck things up call the carrier, they can answer these questions. Also as this is a VUL are you a registered rep? If not your responses should be limited to calling the carrier.

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The only way to answer your question is to ask the carrier. Have them run illustrations at conservative growth and see what happens if she borrows the money and continues to pay the premium, stops paying the premium and increases the premium to repay the loan.

I doubt the policy will survive long at current premium, but there is only one way to find out.

Conservative growth...Most VULs I ever dealt with would require the loaned collateral to be put into the fixed account if one exists they don't want you gambling with their collateral.