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When do I pay back my policy loan that I took against my cash value?

You can get that loan amortization schedule by going to calculator.net and put in the amount that you’re borrowing, the interest rate, and the time period that you want to pay it back and it’ll come up with the monthly payment.

For example, on a $30,000 loan at 5% paying back over five years, the payment would be around $566 a month.

If you’re using a policy loan for a specific reason, especially if it’s for a business loan and you’re paying that back or want to pay it back systematically over a set period of time, then follow that structure.

First and foremost, we want you to be an honest banker. What does it mean to be an honest banker?

An honest banker means that just because you got the loan from the life insurance company and you use your cash as collateral, doesn’t mean that you don’t want to pay it back. If you had that loan from Wells Fargo or Chase Bank, what would happen if you stopped paying on that loan?

Would they come after you?

Would they lien it?

Would they deem your credit?

Heck, yes, they would.

Why would you not treat yourself the same way, if not better?

Meaning pay it back more aggressively.

Remember, the policy loans utilizing your cash value and when to pay it back is there for you, but you must be an honest banker. “Is there for you,” meaning you have all sorts of flexibility. With that flexibility becomes a responsibility and being an honest banker is paying yourself back.

For example, if you use it for a set loan like a car loan, auto loan or equipment purchase for your business, set up the loan amortization schedule. Make the payments back to it consistently.

If you have a chunk of cash that’s building up over here and a checking or savings account outside of your policy, use that to pay back the loan quicker, right? It makes all that money available again for you. It’s more efficient having the cash in your policy than outside of your policy in a checking or savings account.

Now, again, we want you to keep a certain amount in your checking and savings account to protect your mindset. Over and above that, we want you to put everything else into your policy.

When do you pay back your cash value loan if you have on a set loan amortization schedule? Continue to pay that just like you would if you’re paying it back to a bank.

If you have excess cash that’s building up in a checking or savings account somewhere and it’s earning a lower interest rate than what you’re earning inside your life insurance policy, then take that and chunk back the loan.

I take chunks of cash from my policies and put it into my checking and savings account, use it for various things. Then, I’ll pay back my policy loans in chunks.  If the loan is for a specific reason, I’ll set up a loan amortization schedule and pay it back systematically just like I would in the other loan. But, most of the time, I’ll take it in chunks, and I’ll pay it back in chunks because it’s more efficient for me to have that cash in my policy, guaranteed, protected and liquid than it is outside of it in a checking or savings account.

If you have additional questions about policy loans or how to pay them back, give our office a call. We are always here to help.