WL LOANS

[Tahoe Ray]

Pine Cliff is 20 minutes from my condo.
Isn't Falesia beach awesome?
Those pastel de natas can expand your waistline quite quickly!
I am glad you enjoyed Portugal.

Fantastic. We did some ocean kayaking along the coast as well and it was beautiful.

Portugal was our favorite country we visited on that trip.

Our last night in Europe we stayed in the Chiado district in Lisbon. That's a place I wouldn't mind going back to either.

 

[Lloyds of Lubbock]

Next time lets touch base and at least grab a coffee together.
Chiado is very nice, great restaurants and some good sights.

 

[Tahoe Ray]

Next time lets touch base and at least grab a coffee together.
Chiado is very nice, great restaurants and some good sights.

You bet. I'll definitely be back.

 

[Lloyds of Lubbock]

Rather than go back and forth, I am retired (somewhat) , I asked someone that would give a definitive answer.
I had to black out his name for compliance reasons.

 

[Allen Trent]

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

 

[Allen Trent]

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.

I want to believe you, I really do

I just cant wrap my head around paying an added $20k in loan interest to get back to the same policy cash value & death benefit you would have had without a loan is somehow "paying the interest back to yourself". If the interest was paid back to yourself, wouldnt my cash value & death benefit be 20K more than it would have been without the loan?

Crazy that 3 of us cant agree on something so "basic" that is promoted by so many agents in books, videos, social media posts.

If I have a HELOC or business line of credit & my house or building was used as collateral, wont I have incurred costs to have borrowed the money when I sell the property & the bank collects the outstanding loan balance at closing to extinguish the collateral?

would I be paying the bank the interest or myself?

Some agents say you can itemize the life insurance loan interest just like any loan. But if I am paying interest back to myself, how can I deduct it & if I could, wouldnt I have to count the interest as income as interest received?

 

[Lloyds of Lubbock]

Alan,
I am not an actuary so while I am sure I am right there certainly is a chance I am not.
I took advantage of a contact who can be considered to be an expert.
Personally I think this bring closure to the question.

 

[scagnt83]

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!

I am not trying to silence your opinion.

What Im trying to agree upon, is the fact that the interest is in an account you own, able to be spent by you on future purchases. Am I incorrect?

 

[scagnt83]

Your not accounting for the payments you made on the HELOC.

I dont care what the technical classification is that compliance requires. Yes, it is paid to the insurance carrier. Yes, they use it to satisfy the lean. But the policy value reflects it.

 

[Lloyds of Lubbock]

Using your example.
A client wants a 100k and capitalize the interest.
So he gets a loan of 105k assuming 5% loan rate.
He receives a 100%
He pays back the loan of 105k and his policy no longer has a loan.
Can he use that 105K ?
Yes.
Remember he only received a100K so that cost was 5%
You paid a 105k to get a 100.
That 5k went to the insurance company.
I am not sure how a HELOC entered in this.