Secured Loan or Collateral Loan: Policy Implications
It can be tempting to tap into the cash value of a life insurance policy that has been accumulating for many years. However, unlike normal investment accounts, accessing life insurance cash value is not a straightforward process. There are three ways to access your cash value: surrender, policy loan, or a secured loan. Each method has implications that should be fully understood as they can have a serious impact on your tax bill.
Over this series of articles, we will look at defining these methods as well as exploring their implications.
Last week, we looked at the definition of Secured Loan or Collateral Loan. Now – to sum up our series, we bring you the implications of using this method to access your cash value.
Tax Implications
Secured loans are a popular option for accessing cash value because there are no tax consequences when the loan is issued. In fact, the interest from the secured loan may be deductible if being used to earn income.
Policy Implications
Secured loans are a separate entity from the life insurance policy and therefore there are no immediate implications to the actual policy. However, when the insured on the policy dies the secured loan must be paid back before any benefits are paid to the policy beneficiaries.
It is always best to consult a professional before making any decisions regarding your policies cash value. Not only are there tax implications that need to be considered, additional income can affect government benefits and should therefore be taken strategically.
Definitions
ACB – Adjusted Cost Basis
The ACB of the policy is the sum of the premiums paid into the policy minus the actual cost of the insurance policy or NCPI (Net cost of Pure insurance). Similar to the purchase price of a stock or a building to ensure that your original capital does not get taxed again.
Lapsing
This means that your policy loan now exceeds your policies cash value causing your policy to be in jeopardy of being cancelled. If a premium is not paid within 30 days, the policy will be cancelled.
CSV – Cash Surrender Value
The CSV is the value that the policy owner would receive if they cancelled their permanent life insurance policy.
This text is invaluable. How can I find out more?
It’s remarkable to pay a visit this website and reading the views of all friends concerning this piece of writing, while I am also eager of getting knowledge.
With havin so much written content do you ever run into any problems of plagorism or copyright violation? My site has a lot of exclusive content I’ve either authored myself or outsourced but it appears a lot of it is popping it up all over the web without my authorization. Do you know any methods to help stop content from being ripped off? I’d definitely appreciate it.
Thank you for the auspicious writeup. It in fact was a amusement account it. Look advanced to far added agreeable from you! By the way, how can we communicate?
One of the leading academic and scientific-research centers of the Belarus. There are 12 Faculties at the University, 2 scientific and research institutes. Higher education in 35 specialities of the 1st degree of education and 22 specialities.
Excellent site you have here but I was curious if you knew of any discussion boards that cover the same topics talked about in this article? I’d really love to be a part of group where I can get advice from other knowledgeable individuals that share the same interest. If you have any recommendations, please let me know. Cheers!
I got this web site from my friend who informed me concerning this site and now this time I am visiting this site and reading very informative articles here.
We stumbled over here coming from a different page and thought I may as well check things out. I like what I see so now i’m following you. Look forward to finding out about your web page for a second time.
I don’t even know how I ended up here, but I thought this post was good. I don’t know who you are but definitely you are going to a famous blogger if you are not already 😉 Cheers!
Hi there! I could have sworn I’ve been to this website before but after going through a few of the posts I realized it’s new to me. Nonetheless, I’m definitely happy I discovered it and I’ll be bookmarking it and checking back frequently!
Appreciating the time and energy you put into your website and in depth information you provide. It’s good to come across a blog every once in a while that isn’t the same unwanted rehashed material. Wonderful read! I’ve saved your site and I’m including your RSS feeds to my Google account.
Hey There. I found your blog the use of msn. This is an extremely well written article. I will be sure to bookmark it and come back to read more of your useful information. Thank you for the post. I will definitely comeback.
Автомойка под ключ – это быстрый старт в автомобильном бизнесе. Наши специалисты помогут вам во всём.
This is the right blog for anyone who would like to find out about this topic. You understand so much its almost hard to argue with you (not that I actually would want toHaHa). You definitely put a new spin on a topic that has been written about for decades. Great stuff, just excellent!
Hey! This post couldn’t be written any better! Reading this post reminds me of my old room mate! He always kept talking about this. I will forward this article to him. Pretty sure he will have a good read. Thank you for sharing!
You can definitely see your enthusiasm in the article you write. The arena hopes for more passionate writers like you who aren’t afraid to mention how they believe. All the time go after your heart.
256341 542556Some truly nice stuff on this website , I like it. 728608
760739 180810Hmm is anyone else encountering difficulties with the pictures on this weblog loading? Im trying to figure out if its a dilemma on my finish or if it is the blog. Any responses would be greatly appreciated. 786723
244232 592533But a smiling visitor here to share the love (:, btw excellent pattern . 812062
466682 277188A quite informationrmative post and lots of truly honest and forthright comments produced! This undoubtedly got me thinking a whole lot about this concern so cheers a lot for dropping! 218358
859141 188121Cpr KIts extremely great read you know alot about this topic i see! 588358
652156 777800What other people have stated and in some uncommon cases, suicide may well occur. 356255
421652 270198You ought to get involved in a contest personally of the finest blogs on-line. I will recommend this page! 402353
951752 307197Perfect just what I was looking for! . 435357
589482 178241Excellent post, I believe website owners really should acquire a lot from this web site its extremely user pleasant. 361791
433694 489842I was recommended this internet internet site by my cousin. Im not sure whether this post is written by him as nobody else know such detailed about my trouble. You are amazing! Thanks! 63675