We all have money questions. If you don’t, you just haven’t asked them yet. 

Today, we’re answering questions from you—our audience, tribe, fans, those in a quest to control their money and financial future!

https://www.youtube.com/watch?v=ZiW3MeJiL7c

There are some great ones here that might be on your mind too. So maybe you’ll get the answer you’ve been needing. Then you can clear that hurdle and get one step closer to your goals. OR maybe it will prompt you to ask a question of your own. Find out and tune in now!

Table of contentsDoes it Make Sense to Fund a Policy with a Loan?Should You Pay Off Your Mortgage ASAP?Can You Borrow Against Your Death Benefit?Why Can’t You Simply Increase the Face Value of an Existing Policy?Is it Complicated to Prove Disability?What Insurance Companies Do You Suggest?What are the Interest Rates on a Policy Loan?Can I Do a 1035 Exchange Between Companies?What Are the Best Companies to Work with for Policy Loans?How Do Premiums Contribute to Cash Value?Isn’t a Dividend Just a Refund of Premium? Book A Strategy Call

Does it Make Sense to Fund a Policy with a Loan?

A YouTube viewer of our show asked us the question, “Does it make sense to take out equity from an investment rental to start a policy and then borrow from that policy to reinvest in other investments?”

We believe that it makes sense to have a life insurance policy as a foundation for your finances. This is because it protects your income, provides liquidity, and shields your money from creditors. On the other hand, properly funding a whole life insurance policy requires consistent payments. Depending on your funding source, it may not be wise to fund a policy with a loan if you don’t have a strategy for paying premiums after that. This depends on your personal economy and your investing goals. 

The other reason for caution is that it can take a few years for your cash value to “break even.” While you are able to take a life insurance loan right away, your cash value will not immediately equal your premiums paid. It will take time to build your policy to a point where you can make larger investments. However, when you do reach that point, it’s an excellent strategy to leverage policy loans for cash-flowing investments.

Should You Pay Off Your Mortgage ASAP?

This question comes from Lon, another viewer on YouTube. He shared with us a HELOC strategy, and ended with this hypothetical: “The other question that you really need to ask is: Is it really better to pay off my mortgage ASAP vs. using my available income for investing?”

We agree that this is a great question to ask. The answer, again, is not black and white. There are two answers to this question: a mathematical answer, and an emotional one. Mathematically, it often doesn’t make sense to accelerate payments because you lose control. Contrary to popular belief, the less you owe on your home, the more control the banks have. This is true because, in the event that you cannot pay your mortgage, the bank is less likely to foreclose when you have a large loan balance. This is because there’s a chance the banks will be unable to make up the difference.

On the other hand, if you’re only a few years away from owning your house, it’s easier for banks to foreclose. They can sell your property and have a much greater chance of making up the difference on the house. 

This doesn’t necessarily mean you shouldn’t pay down your mortgage. However, it does illustrate the benefits of saving or investing your additional income, rather than putting it into the house. You can build equity in a life insurance policy, then use that to pay down your home. This is one way to maintain control of your home and your money.

Then, there’s the emotional component. Sometimes, you just sleep better at night knowing that you're reducing your loan balance. 

To learn more: 15 vs. 30 Year Mortgage: Myths About Paying Off Your Mortgage