You’ve probably dealt with banks before when requesting a loan for a home purchase or a car. In fact, that experience may be the reason you decided you want to become your own banker.
One of the best aspects of being your own banker is that you get to take loans from the insurance company on your terms, not theirs. Yes, the company is going to charge an interest rate to borrow their money (as they should), but the remainder of the loan terms are completely unstructured. In other words, you control the terms.
Advantages of Policy Loans over Bank Loans:
- Unmatched Accessibility: Policy loans are accessible in under 30 seconds via a simple online request, with funds typically available in 24-72 hours electronically (longer if it’s a check being mailed), and no approval process required.
- No Questions Asked: Insurance companies don’t ask for your credit score or what the loan is for and how you plan to repay it, they just issue the loan.
- Default-Proof: There is no way to default on a policy loan! The insurance company is guaranteeing the collateral used for the loan—the death benefit.
- Unstructured Repayment Terms: Policy loans have no mandatory repayment schedule, allowing you to repay the loan on your own schedule.
- Privacy: Policy loans are private! Nobody (including the IRS) is privy to your loan activity or outstanding loan balance. No need to involve your CPA, ever.
- Control Over Capital: Policy loans put you in charge as the banker, borrower, and loan officer, recycling dollars back into your policy for reuse, over and over. As soon as you’ve made a loan repayment, those funds are available for you to use again!
I’ve got a podcast episode that covers this topic in even more detail, so check out Episode 119 – Policy Loans vs Bank Loans of The Wealth Warehouse Podcast to learn more:
Apple podcast
Cheers,
David
Control your capital, or somebody else will
Leave A Comment