WL LOANS

[LostDollar]

Whether it is a Direct Recognition or a Variable loan interest rate, Insurance companies are not in the business of giving below market rate loans.

????

Mighten they do so if Market Interest rates would happen to increase above the policy loan rates they are contractually obligated to honor for a given policy holder?

I am not a finance person, I have minimal knowledge of what has happened with interest rates up and down, but... I have a whole life policy which I have held for 50 years. The contractually stated interest rate is 6% and I have taken policy loans at that rate. I have no idea what the rates were elsewhere when I had the loans, but I have to believe that over a 50 year period there may have been market rates both above and below 6%.

 

[Lloyds of Lubbock]

If the loan you took helped you or somebody else, enhanced your life, let you take advantage of a unique oppurtunity...it was a good deal period!
Whether you paid 5-6-7 % your life would be just as it is now.
You bought a whole life policy and created a bucket of money for yourself which you used when you needed it.
No application
No credit check
No scrutiny from your CPA
No dinge on your credit report.
Be happy!
Picture from my terrace and hotel from last week

 

[Tahoe Ray]

If the loan you took helped you or somebody else, enhanced your life, let you take advantage of a unique oppurtunity...it was a good deal period!
Whether you paid 5-6-7 % your life would be just as it is now.
You bought a whole life policy and created a bucket of money for yourself which you used when you needed it.
No application
No credit check
No scrutiny from your CPA
No dinge on your credit report.
Be happy!
Picture from my terrace and hotel from last week

Is that Porto?

I was just there a few months ago. Beautiful city.

 

[Lloyds of Lubbock]

That is Albufeira.
You should have let me know, I could have given you some good restaurants.
Did you eat their famous sandwich Franceinha?

Top 5 Francesinhas in Porto

That will definitely satisfy the pickiest of palates.

tasteporto.com

Great city a bit hilly we get up there once a year.

 

[scagnt83]

I will use an example of an older policy.
The policy has a 8% loan rate in advance.
You ask for a 100% dollar loan
The company sends you 92K.
At the end of the year you pay the loan back in full a 100k.
That full 100k did go into your policy value, but is that really paying the interest back to yourself?
In my opinion no, if you differ that's ok you are entitled to your opinion.

Yes, in my opinion it is 100% paid back to you. The interest paid on the Loan goes into an account you own, and can be spent by you.

If you took out a collateralized bank loan for $100k. at 8%.
Then immediately paid it off.
Your net is $92k.

Do the same with WL, and your net account value is $100k after repayment.

With WL, the $8k goes into your account, and can be spent by you in the future. You own it. The Loan interest is part of the collateral. It is not profit for the carrier.

 

[scagnt83]

I believe it also moves the exact amount of loan from the liability side of the carrier balance sheet to the asset side, thus improving the net financial position of the carrier. Lastly, it is a guaranteed rate of return for the carrier as there is no scenario they won't get paid like can happen with their bond or commercial mortgage portfolio. Loans may be the most profitable asset class they hold, especially during the low interest environment like 2009-2022

It gets moved to the asset side because it is collateral they have assigned to them.

It is erased from the asset side once repaid.... including interest.

If you were paying interest to the carrier and not to yourself, the carrier would keep the interest on the balance sheet as an asset, even after the Loan is repaid.

But they dont. Because they dont own the interest, it is collateral just like the Principal.

That doesnt mean they dont profit from Loans. But its from accounting measures. Not profiting from the interest.

 

[Lloyds of Lubbock]

Here is an example of borrowing 100k.
You received 95,280 as interest is taken out in advance.
You paid back 100k to make your policy whole.
How is that repaying the interest to yourself?
Let's make it fun
Let's vote
A. I paid interest to myself
B. Interest went to the company

Have a it

 

[scagnt83]

Here is an example of borrowing 100k.
You received 95,280 as interest is taken out in advance.
You paid back 100k to make your policy whole.
How is that repaying the interest to yourself?
Let's make it fun
Let's vote
A. I paid interest to myself
B. Interest went to the company

Have a it

You have chosen to have the Loan Interest withdrawn from the Policy Value. That is not the standard option or the default in most illustration systems.

In that scenario, you are deducting the Interest from the Policy Value.

Not an apples to apples comparison of a bank loan.

And not the only option for the interest.

You can let it accumulate as part of the Loan. (default option)



So if we are going to take a vote. Lets make it an apples to apples comparison.

 

[Tahoe Ray]

That is Albufeira.
You should have let me know, I could have given you some good restaurants.
Did you eat their famous sandwich Franceinha?

Top 5 Francesinhas in Porto

That will definitely satisfy the pickiest of palates.

tasteporto.com

Great city a bit hilly we get up there once a year.

No kidding? We stayed at Pine Cliffs when we were in Albufeira. Learned to play Padel there.

I was only in Porto for a day. I had one and also the Pastel de Nata which was pretty awesome.

One of my best clients is Portuguese so he gave me a laundry list of stuff to do lol.

 

[Lloyds of Lubbock]

thank you!
You borrowed a100k
You capitalized the interest so your loan was 105k and you received a 100k
You paid back a 105 k to zero out, your cost was $5000 how is that paying yourself back?

You can spin this any ay you want, I told you were entitled to your opinion.
You don't think that I am entitled to mine....that's ok I am not going to lose any sleep.

So let people speak up.....no id necessary!