Author: teamseo

https://www.youtube.com/watch?v=gtYyINEZSK0

Policy loan rates. There’s a lot of discussion on this for the insurance companies, variable loan rates. Most of them are all tied to the Moody Corporate Bond Index Rate. Again, each company has also a floor variable interest rate. Some of them are at 4.5 or 5% as a floor, as a lowest total goal. And the corporate bond rate, I think right now is maybe like a two point something percent, so that you’ll see that variable interest rate loan interest rate has been there at the floor for awhile.

We anticipate it to stay there. Again it’s higher than what you can get at a bank. There is the collaterized cash value loans are gaining his popularity and there’s a bunch of people in the FOOM doing that so that’s good. The company does declare their variable rate annually, and I know it becomes effective on your policy anniversary date.

And it can go jump higher than 0.5% per year, but it can drop. So say the interest rate jumped up to 8% for some reason. Your variable policy interest was at 5%. It can only go up to 5.5% in that year. And then each year, when you 0.5%, if you were at a higher interest rate, said 8% and it dropped to 4%, there’s no limit as far as how low it can drop other than the company floor. So it could drop all the way down say the floor of 5%. If it was, you were at eight, that’s the limitations there.

And I think a lot of people outside the family office group, they don’t realize this stuff. It was new to me. You guys, that’s how I have this group because you guys find some cool stuff. Personally, I don’t know if I’m ever going to go to a third party bank, even if it is for 3.5% interest rate, I might just be, I like the convenience of paying the 5%. Well, I guess if you’re starting to take a loan of more than half a million dollars, it adds up. But personally, I don’t know to me, like going to another bank signing over your life insurance, like maybe just I haven’t done it and I think it’s difficult. I haven’t done it yet. That’s where you can get extra returns out of this thing by doing that.

And when you do it, do you lose the asset protection part of it if your state qualifies for asset protection? Yeah. I see what the next slide touches on some of that.

https://www.youtube.com/watch?v=Cb8xM46tqSY

The collaterized loan has a lower interest rate. And then just in red, again, it’s not necessarily huge cons. It should just for awareness, but you need to apply it. It could show up on your credit report from some people are being able to pull it out where it’s a business loan so it’s not showing up on their personal credit report. I’ll just highlight that. It just made sure. You need regular payments that are set by the bank and most likely, if you put up your cash value as collateral, you will lose that asset protection because now it’s seen. And if it’s there for creditors to look at. I’m not sure if you’re putting it up as the business, but what I mean, it’s usually once you collaterized portions of your cash value then it no longer falls under the asset protection caveat for the state.

I wonder if the bank is like first name or not so if there’s a creditor they’re coming after you, if they got to get aligned to the bank first, but I don’t know. Good question. I think that’s, that’s the trade-off right? When you save a percent, one and a half percent interest rate, that’s the trade-off. And you’ve got to ask yourself if it’s worth it.

For those of you guys, and this is new to you guys, I have a spreadsheet of third party loan vendors in the discord channel. There’s like about how like a dozen of these things, thanks to Nash Eric and Yang, they did the labor work for our group to figure out who were the people to work with, what the latest terms interest rates were. So we had that, that PDF for you guys in that discord channel, the IBC/whole life is where to pull that from.

And just for awareness, usually the amount of cash value you need I think the minimum has dropped maybe not an 80,000, it was hovering around a hundred thousand. A lot of the banks were recording at least a hundred thousand cash value to be put up as collateral. But I think someone’s got an $80,000 one recently.

And if we just took it from the IVC policy, you may just cannibalize from the policy. Whereas if you collateralize it and get a loan, you need to pay back the principal. Right?

Yeah. There’s usually a regular payments mandated by the bank and basically you need to ask permission. So even if you were to, um, take out say an $80,000 collaterized loan, and then you dump more P waves into your policy and you boost that cash value up now 220 and you want another $20,000 in loan just by policy loan, the bank will have to sign off on a lot of those actions or any policy actions going forward while the loan is outstanding. The bank wants to protect their assets, but don’t have a lot of say to what you do on your policy though.

If he got like half a million billion dollars of cash value in there, 1.5% for years, a lot of money. And I think what I’ve seen, some people do is they’ll buy a house cash and then not get a, a home loan because they can’t qualify for a non-qualifying mortgage. Especially if they’re a business operator who shows very low income or good real estate investor who has variable, no active income, a lot of passive income. This might be a way to use exactly what the same sense, right? Bang, cram yourself, you get a policy loan for the house or you buy the house cash but you take the loan from the infinite banking policy that you have. You can get creative with this stuff. Yeah. And just so when you take a policy loan, the interest you pay is not going back to yourself that there’s some confusion there. It is going back to the insurance company. They’re basically, collateralizing your death benefit, your cash value. Remains untouched whether it’s recognized or not, that’s more of a dividend treatment on the cash value, but your death benefit is collateralized. Your compounded growth is not interrupted within your policy.

And some people don’t like the feeling of these interest rate payments, stacking up on you. And for those people, I would say get over it. And it’s just an emotional thing! But if it really bothers you, maybe just set aside a certain year’s payments. Pay it back once a year, or just make sure you have it on the side, in a separate account, for that purpose. It’s another way of dealing with it. But it’s just truly an emotional things you said earlier that the policy kind of cannibalizes itself.

How soon can you take out a loan? So I would wait to be safe, even though you fund the policy probably a day or two it’ll show up in your account and you’ll have it’ll show up as available loan amount and you could take out a loan. What happens in the most Insurance Companies that it takes about 10 days for the funds to truly clear within their system.

Within that 10 days, if you pull out a policy loan, it raises some flags and there’s some additional documentation possibly people need to provide. It’s gotten a lot stricter in the case as of money laundering and fraud, maybe on the rise. Just be aware, even though it shows up in your policy as available.

To be safe, I would wait that 10 days or be prepared to have the agent verify that you, as the policy owner, are aware of the loan, verify your bank account.

And things of that sort when we’ve had some members or some clients like within two or three days pulled out the loan and it just raises some flags within the insurance company.

Which just means they could freeze. It just makes it a little more headache to get it frozen. I just went through this last week. I was trying to get a loan from one of my new policies and I had those send, sending a letter with a blank check. And some like bank statements to go through all that nine yards, which is annoying to get it into there system. And then I had to call it request spot so it takes longer than you think.

But luckily it’s not as hard as taking money out of your broker or your retirement funds. That’s the hardest thing ever!

Once everything is set up, it is pretty smooth sailing. It’s just that initial loan, or if you’re on a policy anniversary, and then you just funded it and you’re pulling out the loan right away again, it’s just those two times there’s going to be, I think a lot of scrutiny if you don’t have your bank account set up.

I’ve got two policies at two different companies. One of them, I can take withdrawals over $15,000 over the phone. I always just call them up. When I send in a check or do a direct deposit from my bank account, we redeposit the funds to pay back my loan. I usually just call them and I specify what it’s going to. Is it going to paid up riders or  they are going to my base because they have to differentiate for them. The other one, I have to do like a signed form and email it in all different ways.

https://www.youtube.com/watch?v=hGuZByH2fUE

We’re getting to your guys’ questions. Now, if you guys want to take them to the chat more.

Ronnie, and I’ll go look up the true, exact definition, but with pen, and I’ll get back to you on this one.

But that’s the first I’ve heard of that too. And that makes sense. Every carrier has their different nuance. I think that’s where it’s good to talk to each other and to say, why would I do one or the other at the end of the day? I think they’re all the same.

https://www.youtube.com/watch?v=o01WDWtr9pg

Alex, are you still there? That’s his policy.

Yeah. Alex, just be aware that you’re not paying back yourself, that 5% interest is going to the insurance company. You may get some small trickle of that based on company’s profits gets paid back. That’s part of this goes to the dividend rate that you receive, but the inch that 5% interest is not going to you directly.

https://www.youtube.com/watch?v=O_HE_HgsFLA

Hopefully your existing policy has no additional P lease. A lot of them that either evaluated existing policies, even. And this is where the design is so important because it’s a guardian policy. It’s a foster guardian policy. Yeah. It’s a fair product that we use heavily and it was just designing. So the other person couldn’t contribute anymore.

It was basically all based premium and he couldn’t put in Peewee. And if you can send him, reached out to me, I’m wanting teachers quickly. I can do a quickie, which of the color. But yeah, this is more than likely the guy built it. Not with the idea that you’re going to get the liquidity. Right out of it, you know, I think my wife had something like this, but we just chose to just cash it out.

Or I think Tyler, you can do like a 10 31 exchange or life insurance too. Why would you do one or the other, like the cash it out or that template? What is it called to building one for life insurance? What was that called? 1035.

Close. 

Basically, I will do a tender most of the time. I would recommend doing a 10 35 just because you don’t wait when you do the withdrawal, it becomes a taxable event.

You do the 10 35. You can reserve all that cash value, put it into a new policy. Then you’d have access to that cash value via policy. I personally, haven’t had a pretense. I still have a Prudential spot on me. It’s so small. I was about to just take the cash value and instead I’m keeping it there and I’m just taking all policy loans.

I didn’t do a 10 35, cause it didn’t make sense because it’s already paid up, but you can just access that cash value via policy loans. There you could possibly even just do a reduced paid-up exercise and reduced on your policy and you could kill the fees and maybe that may even be the better option.

Right. Good to know. If you don’t mind, I’d like to send you over what I have and have you take a look. It depends if it’s big enough, like over 25 grand or if it’s less than that might be easier just to simplify it like 125,000 dollar 401k. I mean, that’s not too much money as well just get rid of it.

Yeah. I mean, right now there’s 105,000 and cash value in there. So it’s grown to be significant. I think I just didn’t want to pay that. My wife’s slimeball.

Yeah, I hear ya. I think he’s trying to sell me on like a, another policy now. 

It’s usually the guy that you’ve never seen since college or high school, they take you out for lunch, right? Field trip, you that your kids and your family are up the creek and you don’t do this.  They’re building you up with everything that you don’t want. It’s not like they’re trying to screw you. They’re just building it the way that they were taught. And a lot of this is very counterintuitive, which is high liquidity, low death payout, which is, goes against everything that they’re taught.

And then low interest rate too, which doesn’t make sense. I’ve had these guys, they challenged me. They’re like, I thought you’re like simple passive cashflow you want returns, right? Don’t you want good returns on this? I’m like, dude, like you don’t get it. Yeah. It’s not the case.