insurance loan advance single life

insurance loan advance single life

Англо-русский экономический словарь .

Смотреть что такое "single-premium life insurance" в других словарях:

Single-Premium Life Insurance — An insurance plan in which a lump sum of cash is paid up front to guarantee payment to beneficiaries. Because single premium policies are instantly fully funded, the money invested builds up rapidly, making for a potentially sizable benefit even… … Investment dictionary

single-premium life insurance — A whole life insurance policy requiring one premium payment, which accrues cash value much more quickly than a policy paid in installments. Bloomberg Financial Dictionary … Financial and business terms

Life insurance in India — Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26%. Life Insurance in India was nationalised by incorporating Life Insurance Corporation (LIC) in 1956. All private life… … Wikipedia

Life insurance — The foundation of life insurance is the recognition of the value of a human life and the possibility of indemnification for the loss of that value. F. C. Oviatt, Economic place of insurance and its relation to society[1] Life insurance is a… … Wikipedia

single premium — noun : the sum that would meet in a single payment the cost of a life insurance policy for the entire policy term * * * a single payment that covers the entire cost of an insurance policy. [1875 80] … Useful english dictionary

Stranger Originated Life Insurance — (STOLI) is a life insurance arrangement, in which speculators, who have no relationship to a person, initiate a insurance policy against their life and fund the premium payments for investment purposes. [cite web… … Wikipedia

Whole life insurance — Whole Life Insurance, or Whole of Life Assurance (in the Commonwealth), is a life insurance policy that remains in force for the insured s whole life and requires (in most cases) premiums to be paid every year into the policy. Contents 1 History… … Wikipedia

Universal life insurance — Universal Life is a type of permanent life insurance based on a cash value. That is, the policy is established with the insurer where premium payments above the cost of insurance are credited to the cash value. The cash value is credited each… … Wikipedia

Term life insurance — or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client… … Wikipedia

Massachusetts Mutual Life Insurance Company — MassMutual Type Mutual company Industry Financial Services Founded Springfield, Massachusetts, USA (1851) Headquarters … Wikipedia

McGee v. International Life Insurance Co. — McGee v. International Life Insurance Co. Supreme Court of the United States Argued November 20, 1957 … Wikipedia

Understanding Life Insurance Loans

If you need money in an emergency, one place to look is your insurance policy. That is, if what you have is permanent life insurance – available as either “whole life” and “universal life ” (see Permanent Life Policies: Whole Vs. Universal).

Unlike term life insurance, which has a set time limit on its coverage period and does not accumulate cash value, universal life does have a cash component, especially later on. "In the early years of the policy, most of the premium goes to funding the indemnity benefit. As the policy matures, cash value increases," says Luke Brown, a retired insurance lawyer in Tallahassee, Fla., who operates YourProblemSolvers to help consumers with insurance, healthcare and consumer issues. (For details, read How Cash Value Builds In A Life Insurance Policy.)

As cash value builds in a whole or universal life insurance policy, policy holders can borrow against the accumulated funds. Life insurance policy loans have one distinct advantage: The money goes to your bank account tax-free.

Insurers generally make no promises as to how fast or to what extent the cash value will increase. So it’s hard to know exactly when your policy will be eligible for a loan. What's more, insurers have varying guidelines outlining how much cash value a policy must have before you can borrow against it – and what percentage of cash value you can borrow.

Your policy is likely to have sufficient cash value to borrow against "typically after the 10 th year the policy is in force,” says Richard Reich, president, Intramark Insurance Services, Inc. a life insurance agency in Glendale, Calif.

Something else to know: This loan isn't taking money from your own cash value. “You are actually borrowing from the insurance company and using your policy’s cash value as collateral,” says Reich.

One attractive aspect of loans against cash value is that you don't have to repay them – a huge benefit in an emergency.

If you do pay back all or a portion of the loan, options include periodic payments of principal with annual payments of interest, paying annual interest only or deducting interest from the cash value. “Loans have an interest rate like any other type of loan. It tends to be in the 7% to 8% range, which is high in our current environment," says Reich. Interest will be fixed or variable, depending on your policy.

There is a good reason to repay the loan if you can. “If the loan is not paid back before death, the insurance company will reduce the face amount of the insurance policy when the claim is paid,” says Ted Bernstein, CEO, Life Insurance Concepts, Inc., a life insurance consulting and auditing firm in Boca Raton, Fla.

The accumulated interest can cut deeply into the benefit: “If the policy loan remains outstanding for many years, the amount of the loan grows and grows due to the added interest,” Brown cautions. “That puts the policy at risk of not providing beneficiaries any money upon the death of the insured.

“At the very least, interest payments should be made so that the policy loan does not effectively grow,” Brown adds. That gives you a better shot of having money left to pay out after your death.

When Life Insurance Loans Make Sense

Here are some financial situations when a life insurance loan might be a sensible choice:

  • You can’t qualify for a standard loan or need cash really, really fast. Because the money is already within the policy and immediately available, it's a quick source of immediate funds for a new furnace, medical bills or another emergency, with no credit check required. Even if you qualify for a traditional loan from a bank or credit union, a life insurance loan could be a valuable stopgap if you t don’t have time to wait for your application to be processed. When the traditional loan comes through, immediately use it to repay the life insurance loan.
  • You can’t afford your policy’s annual premium. Don’t let a life insurance policy lapse because you can’t afford the payment. A loan can keep the policy in effect as long as the death benefit is greater than the amount of the loan.
  • Your only other loan options have much high interest rates. Before paying a higher interest rate for a loan or pledging additional collateral for a traditional loan, consider taking out a life insurance policy loan, says Bernstein. “Since there are no loan terms such as repayment dates, renewal dates or other fees, compared to traditional loans, life insurance policy loans can be very competitive,” he says.

Choosing if and when a life insurance loan is right for you is subjective, Reich says. “You have to look at which is more important; the immediate need for the cash or your family’s need for the death benefit. Understand that any outstanding policy loans will be deducted from the death benefit, resulting in a smaller benefit for your family."

Before borrowing against your life insurance, it may be helpful to consult a financial advisor to weigh all possible options and outcomes based on your financial portfolio. For more, see What are the pros and cons of life insurance policy loans? and 6 Ways To Capture The Cash Value In Life Insurance.

Entrepreneurs interested in starting a small business often face a surprise during the loan process – the need for life insurance to cover the cost of an SBA loan. This requirement is seemingly often buried deep among a long list of other necessities in order to get the loan.

In summary, here’s what you need to know about life insurance and SBA loans:

  1. Most of the time you will be required to get life insurance to get approved for an SBA loan.
  2. You can get a traditional term life insurance policy for the length of the loan. The underwriting for this can take 4 to 8 weeks so make sure to do it as soon as possible.
  3. If you need life insurance fast, you would have to opt for a no medical exam life insurance policy. Depending on the company, approvals can range fromВ 48 hours to a few weeks.
  4. It’s important to set up a collateral assignment for your loan, although not all companies do this.

That’s the gist of getting life insurance for a loan. This means you have a lot to accomplish in a relatively short amount of time. That’s why it’s so important to get ahead of the game whenever possible. Working with an independent insurance agency is your best choice to get solid, practical advice on the right policy, for the right price, that will satisfy the needs of the lender. So if you’re ready to get started get in touch with us, otherwise let’s dive into detail.

Who Needs an SBA Life Insurance Policy?

If a lender feels that the death or disability of a key person (or group of people) in the business would jeopardize the ability of the business to succeed, then it is a prudent choice for the lender to require life insurance policy in an amount that will cover the remainder of the SBA loan.

If you own a sole proprietorship, for instance, you’ll need life insurance for any SBA loans you apply for. Similarly, partnerships with each partner bringing a unique, but necessary, set of skills to the table will often need life insurance coverage for each partner.

Ultimately, if you’re operating a small business, the odds are great that you will need this type of insurance in order to obtain the SBA loan you need to get your business off the ground.

In the event that something does happen to you, the business will be able to pay off the loan if you’ve set your life insurance policy, and beneficiaries, up properly. Your independent insurance agent can help with that too.

What Type of Life Insurance is Best to Cover SBA Loans?

Life insurance, in any circumstance, can be confusing to purchase. There are so many foreign terms and concepts in the purchase process. Here are a few important factors to understand regarding life insurance for SBA loans.

This type of insurance coverage is typically ideal for your SBA loan needs – if your loan term is for ten years of repayment and if you purchase a ten year term life insurance policy. The ten-year term is typically the least costly, and new businesses need every possible penny to invest back into the business.

Annual Renewable Term Life Insurance

This policy is better suited for business loan terms that are less than ten years. Why is this a better choice for shorter terms? Because it becomes more expensive as the age of the policy advances. The first few years are the least expensive, while the final years of a ten year span are the most expensive. By eliminating the later years, you’re eliminating a substantial amount of the policy’s costs.

Sometimes referred to as universal life insurance, whole life policies are not the best choice for SBA loan requirements unless you’re interested in keeping the life insurance coverage after the loan is paid off. The benefit of whole life policies is that you lock in the lowest possible rate for as long as you maintain the policy. This is different from term life policies, level or renewable, as they increase at the end of each five or ten-year term.

Of course, the younger you invest in a whole life policy the better. Young entrepreneurs, especially, might want to carefully consider whether this is a good choice for your needs.

Return of Premium Life Insurance

If your goal for your business is to work hard and invest heavily now so that you can enjoy a greater return on your investment later, then this is an excellent choice. Much like the whole life insurance policy, the younger you begin investing in a return of premium, or ROP life policy, the less expensive it becomes.

Of course, regardless of the investment, you make in the policy to begin with, the beauty of this particular policy is that if you outlive the policy, the premium you’ve paid into the policy will return to you.

While you’re not earning a return on the policy, per se, you are able to enjoy the refund of your premium payments at the end of the policy term without Uncle Sam taking an interest. This is possible because the IRS views this as a refund rather than income. The return, over the course of 30 years can be substantial.

The downside, though, is that as your age advances, the costs of this particular rider, become significantly larger. If you take out the loan in your twenties, for instance, the additional ROP rider is only a few hundred dollars a year.

In your forties, though, it can more than double your yearly premium. Naturally, that’s just more money you get back at the end of your policy should you outlive the policy, and money you’ll have to enjoy later in life.

Skipping the Medical Examinations

All of the policies mentioned above will typically require a traditional medical exam. There are some life insurance policies, albeit limited in scope (and higher in cost), that will issue with no medical exam. These are referred to as simplified issue plans and will issue within 24 and 72 hours. Some insurance companies that offer fast issue loans will deliver policies electronically for the sake of expedience.

Who needs fast issue plans?

Unfortunately, many people who didn’t read the small print quickly enough to go the traditional insurance route will need this option, as will borrowers who have additional risk factors, such as advanced age or health conditions, that make insurance companies balk.

Collateral Assignment for your SBA Loan

Setting up your SBA loan life insurance policy the right way is important in order to not only meet the needs of the lenderВ but also to protect the progress your business has made in repaying the loan.

For instance, if your business were to take out a $20,000 loan with a ten-year term for repayment and you took out $20,000 in life insuranceВ but died in an accident two months before the final loan payment, you do not want the bank to receive the full $20,000 sum.

This is why you should never name the bank or lender as the beneficiary of your SBA loan life insurance policy. Instead, you should assign proceeds to the lender through a collateral assignment. Since the lender is assigned the proceeds but not the beneficiary, the lender will only receive funds in the amount remaining on the loan (in the example above, this amount would be two month’s loan repayment).

The funds that are left over, will go to the beneficiary – usually a spouse, children, favorite charities, or business partners.

Failing to use a collateral assignment results in the lender acting as sole beneficiary and receiving the entire life insurance payout, regardless of how much money is still owed on the loan.

Setting Up Collateral Assignments for Your SBA Loan

This is something your independent insurance agent will do on your behalf. He or she will request a collateral assignment from the carrier you choose once you’ve been approved for a policy.

The lender will receive notice that collateral assignment has been made from the life insurance company. The process can take up to two weeks, which is why you need to move fast once you’ve been approved for the SBA loan.

It is also one other reason it’s so important to work with a trustworthy independent insurance agent – one that is on top of things and will not allow your collateral assignment needs or notifications fall through the cracks.

How Does Life Insurance for SBA Loans Benefit You?

While it may seem like a trial to go through the process of applying for and securing appropriate life insurance for your SBA loan, the truth is that there are some benefits to you in doing so.

First, the screening process may alert you to potential health problems or lifestyle changes you need to make for the sake of your health. These changes can help you live a longer, healthier, and happier life.

Second, life insurance is never a bad thing. It is especially goodВ when you own a business and may lack insurance coverage adequate to replace your income or contribution to the household budget.

Finally, there’s no rule that says you can’t maintain your policy once the SBA loan is repaid – particularly if you’ve purchased a whole or universal life policy. These policies allow you to lock in the lower rates and still enjoy the full benefits of your insurance coverage without the lender taking a cut.

Life insurance isn’t all about business after all. It’s about leaving something behind to help meet the financial needs of your loved ones when you are no longer able to do so yourself.

Guaranteed Approval Life Insurance Program for SBA Loan [2017 Update]

Life insurance is a requirement for your loan but sometimes you may be in bad health or have a past criminal record which gets you declined. If you have tried many options with no success then we may have some good news for you. There is a program we have that will provide you with a guaranteed approval life insurance with no questions asked. The plan is a 1-year term but is renewable and we can get pretty much any amount of coverage within 48 hours. You’ll need to get a copy of your loan agreement to include with your one-page application.

Take the First Step to Get Life Insurance for SBA Loans

Contact us atВ InsureChance В today to get the coverage your need for your SBA life insurance loan. As an independent insurance agency, our strength lies in our relationships with many different insurance companies so we can get you the right policies, issued quickly.

If you have additional questions about life insurance for SBA loans, feel free to visit our quotes page in the right sidebar or call us at 888-492-1967

4 Single Premium Life Insurance Facts

How To Select Basic Life Insurance

Life insurance can act as insurance after death, or it can act as a savings account. Consider the two major insurance types; term life insurance and whole life insurance. Term LifeTerm policies require stated .

Exploring the Different Types of Life Insurance

There are several different types of life insurance you can choose from. Generally speaking, life insurance policies can be divided into two broad categories: temporary life insurance and permanent life insurance. .

What Your Life Insurance Policy Really Means

A life insurance policy provides money to your family in the case of your death. Although it is the best way to make sure that loved ones are taken care, many people refrain from purchasing life insurance for a .

The content on this site is provided for informational purposes only and is not legal or professional advice. Advertised rates on this site are provided by the third party advertiser and not by us. We do not guarantee that the loan terms or rates listed on this site are the best terms or lowest rates available in the market. All lending decisions are determined by the lender and we do not guarantee approval, rates or terms for any lender or loan program. Not all applicants will be approved and individual loan terms may vary. Users are encouraged to use their best judgment in evaluating any third party services or advertisers on this site before submitting any information to any third party.

Discontinue Life Insurance Policy: Surrender,Paid Up,Loan

Last updated on: February 4, 2013

Financial planners advise that one should carefully assess one’s need for insurance and the features of a policy before signing on the dotted line. A insurance plan bought in a hurry to save tax or sold by some insurance agent or a bank executive persuaded are common situations. What should you do if you have already bought an insurance policy? What are the exit options? Those who are wondering whether they should discontinue their traditional life insurance policies have the following options.

  • Let the Policy Lapse
  • Surrender the Policy
  • Make the Policy Paid up
  • Take loan against the policy

In this article we shall discuss these options in detail.

If you stop paying your insurance premium it discontinues the policy, which in insurance terminology is called the policy lapse.

  • One loses protection cover.
  • In case of endowment, money-back policies, if you have paid the premium for the policy for less than three years and decide to discontinue it, you will receive no benefit for the money you have paid as premiums. In case of term plan you will not get any premium back at any time. The insurance company will retain all the premiums paid. You don’t get anything back and all your premiums paid go waste.

If due to ignorance or money crunch if policy gets lapsed one can revive it, called as Policy Revivals: The lapsed policy may be revived from the date of the first unpaid premium by making payment of the premiums in arrears along with interest on such terms and conditions as fixed by the Company. Revival is a fresh contract wherein the insurer can impose fresh terms and conditions. It varies from policy to policy, insurer to insurer Details for revival of LIC policy from LIC’s webpage guidelines for policy holders.

Letting the policy lapse might be the preferred option if you had bought the traditional insurance policy(endowment, money-back) just 1-2 years ago. You will have to forego the premium paid in the first couple of years, but it is better than continuing with it and compounding the error.

2. Surrendering the policy

Surrendering the policy means exiting from the policy before the maturity. It is the voluntary termination of the insurance contract by the policyholder before the maturity or premature encashment of the life insurance policy. On surrendering a policy:

  • The life cover or protection ends.
  • The tax benefit, if availed of on the premium paid till then,may be reversed if surrendered before premium has been paid for two years and 5 years for ULIP products after the date of commencement of policy.
  • On surrendering before the maturity date the cash value that you receive is called the surrender value of a policy.
    • Policies usually acquire a surrender value after premiums have been paid for three years.
    • If any extra premium is paid towards Accident benefit etc, it is usually excluded.
    • The surrender value is calculated by the insurance company depending upon the time for which the policy was in effect (the age of the policy), the total duration of the policy, the premiums paid and any bonus accrued.
    • If the policy is in its initial stages (3-4 years old) the surrender value is only about 30% of the premiums paid plus any bonuses that may have accrued till then. The closer you are to the maturity date of your policy, the higher is the amount you get when you exit. Towards the end of its term, this can be as high as 80% of the premium. Even after three years, during the early stages of policy the surrender value is just a fraction of the total premiums paid.

The top three reasons for traditional policy surrender are: low bonus or benefits, wanting to get proper insurance through term life and better investment options. Our article Surrendering Life Insurance Policy covers Surrendering a Policy, Tax implications , calculating surrender value, how to surrender.

3. Turn it into a paid-up plan

When you make a policy paid up,

  • You don’t have to pay any more premiums,but the policy is not cancelled.
  • Instead the policy continues till maturity with a reduced Sum Assured. This means that you would be halting future contributions to the policy, but still let it run to maturity. The reduced sum assured is called the Paid up value of the policy.
  • Paid up value is calculated as a proportion of premiums paid versus the premiums actually needed to be paid.
  • If you have bought insurance policy with additional benefits such as future bonuses and dividends, these would be lost in such a policy. However, you would retain any bonuses paid out before you made the policy “paid-up” and would be paid on maturity( end of the policy term) or on death, whichever is earlier
  • Riders such as Accident benefit and critical illness riders do not acquire any paid-up value.
  • Many traditional products offer final additional bonus (FAB) as an incentive to stay with the policy. The FAB,if associated with your policy, given at the end of the policy term will not be given for paid-up policies.

LIC’s webpage for Bonus Information, LIC’s Bonus rates for 2010-11 (pdf)

Paid-up value is calculated by multiplying the original sum assured and the ratio of the number of premiums paid to the number of premiums payable.

Paid Up Value = Original sum assured * (Number of premiums paid / Total number of premiums that were required to be paid)

Total Paid Value = Paid Up Value + bonus.

For example Mr Mehta pays Rs 25,000 annual premium on a quarterly basis, and the sum assured is Rs 5 lakh for a policy term of 20 years. If he stops paying after four years,then

  • As he pays quarterly premium Premium paid = 4* 4 = 16
  • Value of premium paid = 25,000 * 4 = 1,00,000
  • Total number of premiums he had to pay = 20* 4 = 80
  • The paid-up value will be = Rs 5,00,000 X (16/80) =1,00,000

For example, a policyholder of age 25 years holding LIC endowment policy with a policy term of 10 years pays a premium of Rs 1,03,032 for Sum Assured(SA) of Rs 10 lakh. If the policyholder converts the policy to paid-up after paying five premiums, (Ref: MoneyLife)

  • He would have paid Rs 5,15,160. (1,03,032 * 5)
  • The paid-up value will be half the Sum Assured (SA), which is Rs 5 lakh.
  • The paid-up value along with bonus declared till converting the policy to paid-up will be paid on death or end of policy term. The total bonus based on current bonus rate (of Rs34 per thousand of SA) is Rs 1,70,000. Please Note The bonus amount will depend on the actual declared rate , this is just an example
  • The total paid on death or after completing the policy term of 10 years is Rs 6,70,000.
  • The return on premium at the end of 10 years is 3.33%. If you had continued premium payment till the end of policy term, the return on premium would have been 4.73%.
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