by Guest » Mon Mar 25, 2013 07:15 am
I’ve a whole life insurance policy. I know that I can take out a loan from there. But if I do so and die before paying off the same, what consequences would it bring? Wouldn’t the beneficiary get the full death benefit?
Posted: Sun Apr 14, 2013 05:20 am Post Subject:
The answer, just so we're clear is: death benefit will be reduced by the outstanding loan amount.
If it weren't, the premiums paid would not result in $0 cash accumulation in policy years one and two, and there would not be a need for a standard nonforfeiture law that requires a WL (and other cash value policies) to begin accumulating cash value by the end of the third policy year.
Actually that's not 100% true. A whole life policy making use of a modified reserve design would explain a zero cash surrender value in year 1, and that would not require an implied surrender charge.
And regarding SNFL, that was actually adopted law to force the sharing of profitability (the asset share) and has nothing to do with surrender charges, which are technically used to amortize expenses. So the suggestion that SNFL reduces surrender charges is fundamentally incorrect.
Posted: Wed Apr 17, 2013 10:52 am Post Subject:
I don't think it to be a feasible option, but the beneficiary in this case may get the full benefit...
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