Install
Cash Value and Loans blog
A 1035 exchange from start to finish: forms, timing and pitfallsThe steps of a section 1035 exchange in order, from collecting the old policy's numbers to the tax form that follows, with what to send, ask and leave in force.Moving a policy with a loan in a 1035 exchangeFourteen questions on how a policy loan is treated in a 1035 exchange, when loan relief becomes taxable boot, and what a new insurer does with a carried loan.Agent commissions and surrender values: claims testedHow first-year commissions and acquisition costs relate to low early surrender values, with seven common claims tested against how permanent policies work.Before you replace a permanent policy: a fifteen-point checklistFifteen questions to answer in writing before swapping one cash value policy for another: what you hold, what you would get, the process and who gains.Borrowing from your own policy compared with a bank loan or HELOCApproval, interest, repayment, collateral and risk compared for a policy loan, a bank loan and a home equity line, with a worked $40,000 example.Why heirs do not get the cash value on top of the death benefitQuestions and answers on what happens to whole life cash value at death, how loans and paid-up additions change the net payout, and why the two never stack.Using cash value in a financial emergency: the order to try thingsA cheapest-first sequence for tapping a permanent policy in a crisis, with what each step does to coverage, the loan balance and the tax bill.Direct and non-direct recognition loans: how borrowing affects dividendsHow a whole life insurer may adjust dividends on borrowed cash value, why the two designs differ, and what to ask about how loaned values are treated.Can creditors reach life insurance cash value? Answers by situationEleven questions on when a creditor or bankruptcy trustee can reach a policy's cash value, and why the answer turns on state, timing and ownership.Fixed, variable and wash loans compared: what borrowing costs netPolicy loan rate structures side by side on a hypothetical $40,000 balance: net cost after credited interest, predictability and the questions that expose it.Your policy turned out to be a MEC: what it means and what you can doSteps after learning a policy is a modified endowment contract: confirm it in writing, understand gains-first tax, weigh your options, see a tax professional.Four retirees with an old policy: keep, shrink, convert or sellFour hypothetical retirees hold an aging life policy and a different need; each works through keeping, reducing, exchanging or selling it, with the arithmetic.How retirees lose a life insurance policy by accidentSix quiet ways a policy lapses in retirement, from a failed bank draft to a growing loan, each with the warning signs and the safeguard that prevents it.Indexed UL loan mistakes: rate, crediting and lapse trapsEight mistakes people make when borrowing from an indexed universal life policy, how each happens, what it costs and how to avoid it, with worked arithmetic.An infinite banking break-even worksheet using your own numbersA step-by-step worksheet to compare premiums, cash value, loan interest and the growth you give up, with a worked example and blanks for your own policy ledger.Infinite banking claims weighed fairly, one assertion at a timeSix common infinite banking claims tested against how whole life loans, dividends and taxes work, with credit where it is due and limits stated plainly.Handing a juvenile whole life policy to your child at adulthoodWhat a parent or grandparent does when a child's whole life policy reaches adulthood: transfer, premiums, cash value, riders and keep-or-surrender choices.Keeping an old permanent policy affordable on a retirement incomeSteps to try before letting a policy lapse: a premium audit, dividend and cash value offsets, a lower face amount and nonforfeiture options.Keep or drop a permanent policy once the children are independentHow to decide about a whole life policy after the children are grown: which needs remain, the yearly cost of keeping it, the exits and a decision list.A lapse with an outstanding loan, worked through to the tax billA hypothetical owner's policy lapses with a large loan: how the gain is computed, why no cash arrives, and the ways owners avoid or soften the result.Myths about tax-free loans from permanent life insuranceEight claims about tax-free policy loans tested against interest, MEC rules, lapse, the smaller death benefit and how illustrations smooth over the risks.Mistakes that sink a loan-heavy policy in retirementSeven ways borrowing from a permanent policy goes wrong after 65, with the arithmetic, the warning signs in the mail and the rescues that still work.Before you take money from a policy: a loan or withdrawal checklistQuestions to settle before borrowing from or withdrawing cash value: basis, MEC status, guaranteed values, death benefit, loan terms, repayment and proof.MEC status and 1035 exchanges: questions and answersWhether MEC status follows a 1035 exchange, how a new policy gets its own seven-pay test, why paperwork matters, and what a MEC-to-annuity exchange means.The seven-pay test behind a MEC, explained with arithmeticHow the seven-pay limit works in principle, how funding speed and benefit cuts can trip it, an invented example, and why gains-first taxation makes it matter.Turning an old cash value policy into long-term care coverageWhen swapping an unneeded permanent policy for a hybrid or annuity-based care contract makes sense, what it costs, and a decision list to test your own case.Paid-up additions in four households: who benefits and who does notFour hypothetical households test a paid-up additions rider against its cost: a lower death benefit per dollar in exchange for faster cash value.A permanent life policy in a divorce: ownership, premiums and valueFour hypothetical couples show how ownership, a decree's insurance clause, a cash value buy-out and an unchanged beneficiary form can each change who gets what.Policy loan worksheet: interest, repayments and what the policy can carryA repeatable worksheet for a life insurance policy loan: grow the balance with unpaid interest, test payoff plans, and check the loan against cash value.Premium financing in principle: loan, collateral and exit planHow a third-party loan pays for a large policy's premiums, what the collateral and interest terms mean, how the exit works, and what has to go right.Questions to ask before agreeing to premium financingTwelve questions for the advisor, lender and insurer on rate risk, collateral calls, exit triggers, fees and tax advice, and what a good answer looks like.Premium financing under stress: scenarios when rates or values disappointFour hypothetical borrowers face a higher loan rate, a weak policy, a collateral call and an early death, with the arithmetic and exit choices for each.Replacing a permanent policy: mistakes that make the new one cost moreEight errors that turn a policy swap into a loss, from cancelling too early to reading projections as promises, with what each costs and how to avoid it.Rescuing a permanent policy when the loan outgrows the cash valueA triage playbook for a policy whose loan is closing in on its cash value: get the ledger, find the lapse date, weigh each fix, and run the tax checks first.Retirement myths: the reasons people drop coverage too soonEight reasons retirees give for dropping life insurance, such as grown kids or a paid-off house, tested against pensions, Social Security, taxes and estates.Should you sell, surrender or keep a policy you may no longer need?A question-by-question way to choose among keeping, reducing, surrendering or selling a policy, covering purpose, cash value, health, premiums, tax and heirs.Stress-testing an in-force illustration at lower crediting ratesHow to ask for a ledger at the guaranteed and a lower assumed rate, then a worksheet that finds the lapse age and the premium needed to keep the policy alive.Surrender, sell or keep an unneeded policy: three exits comparedCashing in, selling through a life settlement, or keeping and reducing a policy you no longer need, side by side on cash, tax, death benefit and who to hire.A universal life policy in its grace period: notices and deadlines in orderDay by day from the monthly deduction that exceeds the account value to the grace notice, the lapse date and the reinstatement window, with what to ask.Your universal life projection shows a shortfall: a response planWhat to do, in order, when a projection shows a universal life policy running out early: gather ledgers, test fixes, weigh a smaller benefit or an exchange.Ten checks before you exchange a policy and when to say noA ten-point checklist for a policy replacement or 1035 exchange: charges, new clocks, health, lost guarantees, loans and incentives, with the reason for each.Whole life next to bonds and savings accounts: a fair comparisonWhole life, bonds and savings accounts compared on liquidity, guarantees, tax and purpose, with no return claims and a note on the insurance component.A yearly review routine for a permanent policyA checklist with reasons for each item: what to request, how to check values, loans and dividends, who owns and benefits, plus a deeper review every five years.