Atlanta Financial Newsroom

Fact or Fiction

AFA
December 11, 2018

Fiction:
Insurance policy loans are an attractive, easy and inexpensive way to access cash.

Fact:
A loan on your insurance policy can be a useful benefit but requires require careful planning. A policy loan puts up your policy’s cash value as collateral. If you defer your loan interest, it will be added to the next year’s loan principal. If unwatched, your loan may exceed the maximum collateral limit. Then, if you choose not to make a repayment, the insurance company will recover the amount due from your cash values, potentially resulting in termination of your life insurance. Careful planning and ongoing monitoring of outstanding policy loans is essential to avoid unexpected consequences. If you are considering borrowing from your life insurance policy, consult your advisor today for insight into whether this technique makes sense for you. If you have an outstanding loan on an existing policy, please allow us to work closely with you to carefully monitor policy performance.

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