All Forum Posts by: Zachary Paschke

That’s relatively true. It depends on the values. Interest rates on policy loans vary from 2% - 10%. The best option I’m seeing with a carrier right now is turning out about 10% annual growth and a 5% loan. The loans on this one are non-direct recognition which means the insurance company still pays your full dividend even if you take a loan on the policy (not all companies do this). 

Navy Mutual does have great rates. They don’t have to play by the same rules. They were able to get themselves some regulatory exemptions. It may be counter intuitive, but for building cash value you want more expensive coverage. It increases the amount of cash you can get into the policy.

Hey @Ashley Oyirifi, this sounds like a rough deal. Is this lady ready to pass any moment? You may not need the capital to fix it up for years. I agree. I’d be real cautious. Depending on age and health you’re probably looking at hundreds of dollars a month for a low value life insurance policy. The closer she is to passing away the more expensive it will be. 

@Adrian Birchler, if you would like help with that policy you can send me a message. I specialize in overfunded whole life policies and I’m licensed to help you in Ohio. 

You’re right. It is an incredible option and some of the benefits you’ve named only scratch the surface. I’ve cultivated a relationship with a carrier that has created a policy that is perfect for infinite banking. This my be surprising, but not all whole life policies are equal and certain large mutuals have not offered great terms. 

I did all the boring insurance guy research. Non-direct recognition loans (the company doesn’t cut off your dividend just because you take a loan out on the policy), Low borrowing interest of 5%. Guaranteed interest of 4%, non-guaranteed dividends hovering around 5-6%, Living benefits (because what if you don’t die, but your terminally, critically, or chronically ill?), orphan benefits, competitive scholarships for the kids.

These policies are great for kids too. Imagine if your parents handed you a fully funded policy that would only grow over time with no additional premium needed. 

Mark, you’re right. It’s important to make sure the policy is properly structured as well. I currently sell a whole life policy that has  a 4% guaranteed interest rate and a non-guaranteed dividend that has historically paid 5-6%. They charge 5% for a loan. That’s the only ‘fee’ for your loan. The key is the dividend is non-direct recognition. Meaning the divided continues growing the same with or without the loan. 

What bank would continue paying you interest on money you have locked up into a deal?  So for anyone looking to do this, pay the policy up (as much as possible) in the first few years and get a policy with non-direct recognition loans. Know your interest rates. They vary company to company. 

@Kyle Seidel. Sounds good you did it right! If the complete reason for the loan is business, then it’ll be like a traditional loan for business. 8% is pretty aggressive. Good luck with the rental!

 Usually in this kind of case you want to take a loan out on the policy instead of cashing it out. Loans are generally tax deductible. I’m not a CPA, but from the sounds of it you’ll initially owe on the distribution and write it off as standard depreciation. 

@Thomas Rutkowski is an expert with this. He’s right you have to be careful who you do business with. They should know how to properly structure your policy. Whole life really only makes sense if you get the most possible cash in as soon as possible. Most insurance agents are not knowledgeable about how to write these policies.

The other thing people should consider is starting overfunded policies for their kids. @Mike McCarthy, you should at least look at some numbers. Research doesn’t replace seeing the numbers on the page.  If Thomas isn’t, I’m licensed in PA. I can help answer any questions you have and run some numbers for you. 

Hi @John C.,

I’m sorry your kinda stuck in the middle of this situation! The concern your lender has is a valid one. The common problem with disability policies is exactly what you stated: they’re often set up only for the benefit of replacing your income (would there be enough to pay him as well?). How much replacement would you need for yourself as well as his needs? Not only that, the policies are expensive!

I would ask him if he’d consider a life insurance policy with living benefits. I sell some policies that include this option for no additional cost (the premium is competitive with other policies that don’t offer it). Not all living benefits are the same. You should be looking for a company that offers a Terminal Illness, Critical Illness, and Chronic Illness rider (These are often also referred to as accelerated death benefits). 

These riders are not disability policies! They’re an opportunity to access some or all (depending on the company) of your death benefit before you pass away (if you meet the qualifying condition). 

You can either ask your life insurance agent for some direction, or feel free to reach out to me by message if you’d like me to run some options for you. 

Great explanation! I can't tell you how many times people come to me confused about their PMI.

I did try to get my PMI dropped at 80% of LTV on my personal house and the bank required a new inspection to verify the value of the house didn't drop

When people are looking for life insurance to help cover their mortgage I’ll often recommend a Return if Premium coverage for 20-25 years. If you outlive your life insurance, the company will offer your premium back to you towards the end of the policy. It’s often enough money to pay off the rest of the mortgage. 

Return of premium is a little more expensive, but it’s a convenient coverage for homeowners or if you have a family member that struggles with saving money it can be helpful. 

On the health insurance side you should absolutely start an HSA and contribute the max of what you can contribute. HSA money is pre-tax (including employment taxes) -note I’m not a CPA, confirm tax stuff with your tax professional. HSA money can be invested like a 401k and is treated like a retirement account when you hit retirement age (so you can always get it out). Mr. Money Mustache has a great article on HSA accounts. 

If you own your own business you should be writing off your health insurance expense on your taxes. You shouldn’t necessarily write off life insurance, but you should write of health insurance.