Not Your Average Financial Podcast™

Episode 345: Direct vs. Non-Direct Policy Loans, The Debate and The Truth

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In this episode, we ask:

  • What is a policy loan?
  • Why do we love the Bank on Yourself® type whole life insurance policies?
  • Is a non-direct recognition policy loan the best feature in the financial universe?
  • What is a direct recognition policy loan?
  • Is there really no difference between the two?
  • Does it really matter?
  • Why is transparency key?
  • What is the history between non-direct recognition and direct recognition policy loans?
  • How long have life insurance policies loans been around?
  • Over 150 years ago, how did insurers treat these separate loans with distinct interest rates?
  • What about collateral?
  • What about the life insurance general fund?
  • What about using your policy as collateral?
  • What about dividends?
  • How would the policy continue to earn interest?
  • Where is the money for the loan coming from exactly?
  • Why did some insurance companies move over to do direct recognition policy loans?
  • Why did some insurance companies hold firm with non-direct recognition policy loans?
  • What is a mutual life insurance company?
  • What about profits?
  • Who should logically have a higher dividend?
  • Who is penalized?
  • Do companies offering direct recognition policy loans offer slightly higher dividends?
  • Who is going to have a better experience?
  • What good is that cash value if you can’t collateralize it?
  • What about the living benefits of life insurance?
  • What is outrageous?
  • What did Nelson Nash say?
  • Who has real liquidity?
  • What about direct recognition policy loans for a time horizon (for 10 years, etc.)?
  • How about an example?
  • What is a 1035 exchange (a like-kind exchange for life insurance)
  • Would you like to learn more in Episode 252?
  • What happens in a scenario where direct recognition policy loans were taken?
  • What happens in a scenario where non-direct recognition policy loans (as in a Bank on Yourself type whole life insurance policy) were taken?
  • What about the dollar diagram?
  • What about the one dollar?
  • What happens if you put this single dollar into a paid up additions rider (PUAR)?
  • What about opportunity cost?
  • What happens if you spend that dollar instead of saving it?
  • What is the interest?
  • What benefits you?
  • What about dividends?
  • How do the insurers earn money for dividends?
  • How does that benefit policy holders?
  • How much would you have?
  • How many dollars…?
  • Is there such a thing as paying too much premium?
  • How about another example about a policy loan to purchase a car?
  • What did the three cars cost you?
  • How much did you net in the non-direct recognition policy loan’s policy?
  • Knowing all of this, why would you buy a car any other way?
  • Should you just get a bank loan?
  • What totally defeats the purpose of Bank on Yourself®?
  • Are you being penalized?
  • Which scenario keeps me more in control of my own money?
  • Which scenario yields control to the bank?
  • What about Bank on Yourself® policy engineering? 
  • Would you like to meet with Mark?
  • Would you join us next week?

    • The topics and images presented in this podcast are general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation. 

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