Can someone explain how this works? I have around $150k cash out value or can borrow up to $150k from it (ballpark numbers). I was thinking to use it for a house instead of taking out a 7% loan.
Do I have to pay it back monthly? Pay it back at all? What if I don’t?
Any pros/cons I should know about?
Thanks

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Posted by slackster

Houston

Member since Mar 2009

89380 posts

Posted on 1/9/25 at 9:54 pm to EvrybodysAllAmerican

Curious if you have a call into the agent that sold it…

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Posted by kung fu kenny

Birmingham

Member since Sep 2017

1879 posts

Posted on 1/9/25 at 10:33 pm to EvrybodysAllAmerican

What is your loan rate? On the surface I’d say if you don’t plan on dying soon and it’s a good borrowing rate, go for it. But this is not financial advice

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Posted by iknowmorethanyou

Paydirt

Member since Jul 2007

6586 posts

Posted on 1/10/25 at 4:31 am to EvrybodysAllAmerican

How old is the policy? That usually dictates the loan/interest rate terms.

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Posted by EvrybodysAllAmerican

Member since Apr 2013

12052 posts

Posted on 1/10/25 at 1:21 pm to slackster

Yes, im waiting to hear back from agent but wanted to know what questions to ask and to maybe get different perspective from someone not directly involved in it.
its 10+ years old so my understanding is i can pull money out without penalties (and i think without taxes) (im also waiting on a meeting with the CPA to discuss that) . but not sure how that affects the overall plan. basically just trying to decide if thats a decent option or if im missing something that would make that a dumb idea. I guess hard for anybody to say with limited info.

This post was edited on 1/10/25 at 1:31 pm

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Posted by La Place Mike

West Florida Republic

Member since Jan 2004

30158 posts

Posted on 1/10/25 at 2:48 pm to EvrybodysAllAmerican

I am curious. Where are you buying house for 150K?

Would this be a primary residence? A second home? Would this be a down payment? So many questions to be answered.

But to answer your questions.

quote:
Do I have to pay it back monthly?

No.

quote:
Pay it back at all?

No.

quote:
What if I don’t?
Any pros/cons I should know about?

If you don't pay it back the accrued interest will reduce the death benefit and the remaining cash value. It could also cause policy to lapse and then you would have a taxable event.

If you cash out you would have to pay taxes on the interest earned. The premiums you paid are returned to you tax free. Instead of cashing out you may be able to withdraw the premiums you paid tax free leaving the interest in the policy but this would more than likely cause the policy to lapse.

Honestly, IMO, if you do take a out a loan pay it back but I would leave it alone. You purchased this plan for retirement. USE it for retirement

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