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Is using the cash value in a whole life insurance plan to pay your premiums considered a loan?
Wiki User
∙ 15y ago
Yes. Commonly referred to as an 'automatic premium loan', if no premium payment has been received by the end of the grace period, such a loan is issued to pay the missed premium. Like any loan, interest will be charged against it and you'll be notified each year of the amount of interest being charged and how much it will cost to pay off the loan. If you later decide to cash in your policy, the outstanding loan balance will be deducted from the amount you receive.
If you die with a loan against the policy, the amount of the loan will be deducted from the amount your beneficiary will receive.
Wiki User
∙ 15y ago
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What is paid up value in a life insurance policy?
The paid up value of your life insurance is the point at which no further premiums have to be paid. It can occur either by paying all of the premiums in a lump sum or by paying all of the premiums due in instalments. The precise value of a paid up policy is a fanction of the face amount of the policy, less policy loans or accrued earnings, if applicable.
How can one determine the cash surrender value of a life insurance policy?
The best way to determine the cash surrender value of a life insurance policy is to talk to the local insurance agent or call the insurance company direct. This can make the premiums go up however.
Is life insurance preminums more than cash value insurance?
Google the types of life insurance first. You need to learn a little about life insurance. The terms you are using and spelling are weird. Most people use cash value insurance to describe a type of life insurance.I do not really understand what you mean but, from my experience, I can only guess that by life insurance you mean term life insurance. If that is the case, then, in most situations, term life insurance has lower premiums than cash value life insurance (whole life, universal life...). Be well! mcdlife.com
How does one find out the cash value of Life Insurance?
The website Insure shows one how to calculate the cash value of Life Insurance. Their model shows what could happen to the cash value and death benefit if one taps his/her cash value to pay premiums.
Are life insurance premiums deductible on year end taxes?
No. That's why the proceeds aren't taxed as income. Answer Correct...premiums are taxable. Death benefits are generally not taxed as income. Also if it is permanent life insurance policy and has some cash value built up and you take that cash out, the amount of cash less the premiums paid into the policy ("your gain") is taxable. Additional comment: Actually, if you take your cash value out as a loan, you do not have to pay taxes on "gains" as long as the life insurance is in place, hopefully until you die.
When do you stop paying for whole life insurance?
Whole life insurance has a definite period during which premiums are paid. This will be specified in the policy. When first purchased, in addition to the amount of insurance selected, the purchaser selects the period of time that premiums will be paid. The amount of premium will depend both upon the amount of insurance and the length of time that premiums will be paid. Once the selections are made, assuming that the insurance company issues the policy on the terms that you have requested, the policy will state those. Once premiums have been paid for the stated period of time, the policy is considered to be "paid up", and no further premiums need to be made. A whole life policy also accumulates "cash value". This can be considered to be a sort of savings account within the policy. Every premium is allocated between the cost of the protection (the insurance itself) and the cash value. A point may be reached where the accumulated cash value, and the interest or dividends that it accrues, is enough to pay future premiums. If that happens, the obligation to pay premiums may end before the time stated in the policy.
How does a life insurance policy lapse?
A life insurance policy lapses when you stop paying premiums, or if cash value depletes and no more premiums are being able to be paid from the cash value. Usually, there are 30 or 60 days of grace period before lapsing.
What are examples of cash value insurance?
Cash value insurance can be "whole life insurance" or "universal life insurance". There are few differences on how the funds are invested and if dividends can be paid that would increase the cash value, but both types of permanent life insurance can accumulate cash value. There is also a type of term insurance that has a "return of premium" feature that will return all premiums back at the end of the term. This type of term life policy is not actually accumulating cash value because you only get back the premiums you paid.
What are the examples of cash value insurance?
Cash value insurance can be "whole life insurance" or "universal life insurance". There are few differences on how the funds are invested and if dividends can be paid that would increase the cash value, but both types of permanent life insurance can accumulate cash value. There is also a type of term insurance that has a "return of premium" feature that will return all premiums back at the end of the term. This type of term life policy is not actually accumulating cash value because you only get back the premiums you paid.
What is paid up value in a life insurance policy?
The paid up value of your life insurance is the point at which no further premiums have to be paid. It can occur either by paying all of the premiums in a lump sum or by paying all of the premiums due in instalments. The precise value of a paid up policy is a fanction of the face amount of the policy, less policy loans or accrued earnings, if applicable.
Under what circumstances is home content insurance worth the premiums it requires?
It is worth it when the contents of the home exceeds the premiums being paid. The insurance should recover some of the value of the contents. Otherwise it is not worth the money this is being paid.
How can one determine the cash surrender value of a life insurance policy?
The best way to determine the cash surrender value of a life insurance policy is to talk to the local insurance agent or call the insurance company direct. This can make the premiums go up however.
Is life insurance preminums more than cash value insurance?
Google the types of life insurance first. You need to learn a little about life insurance. The terms you are using and spelling are weird. Most people use cash value insurance to describe a type of life insurance.I do not really understand what you mean but, from my experience, I can only guess that by life insurance you mean term life insurance. If that is the case, then, in most situations, term life insurance has lower premiums than cash value life insurance (whole life, universal life...). Be well! mcdlife.com
How does one find out the cash value of Life Insurance?
The website Insure shows one how to calculate the cash value of Life Insurance. Their model shows what could happen to the cash value and death benefit if one taps his/her cash value to pay premiums.
How can you get the best possible quote for car insurance?
Contact a broker or agent who can obtain multiples car insurance premiums. Prices can then be compared by the agent to determine which is the best value.
What exactly does insurance price quotes mean?
Price quotes from insurance companies can vary quite a bit. Premiums can depend on many things like age,previous claims,value of property,etc. A good is example is car insurance where age and driving record can make a large difference in premiums.
What type of policy is not permanent life insurance?
Of the various types of life insurance that exist, "term" life insurance is not permanent. This is because it remains in force only as long as premiums are paid. In contrast, "whole life insurance" is frequently also referred to as "permanent insurance" That is because it accumulates cash value, which is sort of a saving account built into the policy. Therefore, once cash value reached a certain amount, in theory, no further premiums have to be paid because the policy can be maintained based upon the cash value.
