Not Your Average Financial Podcast™

Episode 54: Rules of Thumb for Taking Out a Bank On Yourself Policy Loan

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In this episode, we ask:

  • When are the appropriate scenarios for taking a policy loan?
  • Are you thinking like a banker?
  • Do you want your income to equal your premium?
  • What are the rules of thumb?
    • When should you use a policy loan? Would it take you more than six months to save for that?
      • Why six months? Is that arbitrary?
      • When should you pay cash? Is paying cash better than taking a policy loan?
      • What about loan interest?
      • How does the dividend date come into play?
      • Is there any room left in your policy?
      • Do you have the cash?
      • How quickly do you plan to pay the loan off? …More than six months?
      • What does the room in the policy look like? …What is the best and highest use of that cash?
      • Where will your money work hardest for you?
      • Why put money into a policy first and then take a policy loan?
      • How long does that process take?
      • What is “saving on the other side of the purchase” ?
      • How is this different from going into debt?
      • When is it a good time to break the rules above?
      • What are some things you should take loans out for?
        • A phone?
        • A laptop?
        • A health insurance deductible?
        • A down payment on a home?
        • Home remodeling?
        • Car repairs?
        • Large emergency costs?
        • Payroll?
        • Inventory?
        • What is the threshold?
        • Are these hard and fast rules?
        • What’s the minimum you can repay on the policy loan monthly?
        • There are no fees?
        • It takes about a week to get policy loan funds?
        • You can loan up to roughly 85%-90% of your cash value?
        • Is your money sitting still or in motion?
        • Do you budget your cash value?
        • Are you double counting dollars?
        • When should you not take out a loan?
        • Have you seen It’s A Wonderful Life?
        • Why do banks love your cash value as collateral for a bank loan?
        • Have you read the fine print?
        • Do you still have questions? Talk with us!
          • ...more
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