Buying a House? Life Insurance Can Help
Buying a house and life insurance - what does one have to do with the other? Well did you know your life insurance may be able to help you with the purchase of your home?
If you have cash value life insurance, whether whole life or universal life, the cash value may be available to help you with a down payment. Depending on the policy, the cash value that has accumulated may be available by policy loan or a partial withdrawal. However, you need to keep in mind that either way, the ultimate death benefit will be reduced by the withdrawal amount, or the total loan amount.
Both whole life and universal life insurance have policy loan provisions. Depending on the amount of cash value within the policy, you can access the monies and, like every loan, it will have interest that’s due, and it should be repaid like any other loan. You’re repaying yourself, however, and not a bank. The total loan amount would be the principal and any outstanding interest due. Keep in mind that the ultimate, or net, death benefit would be your insurance amount less the outstanding loan and any interest due.
Unlike whole life insurance, universal life insurance also has a withdrawal provision, and again, depending on the amount of cash value within the policy, you may be able to make a withdrawal. Withdrawals are permanent and cannot be repaid, unlike a policy loan. The insurance amount of the policy is reduced by the amount of the withdrawal, which is also different from a loan. There’s usually a processing fee involved as well, which may vary by insurance carrier.
About the author: Melanie Tretheway has been in the life insurance business for over 30 years. She is a mother of two who loves baking, reading, gardening, and taking care of her family. Melanie takes great pride in making sure you are informed, especially when it comes to choosing the right life insurance policy for your family. You can contact Melanie at 1-800-651-1953 or MTretheway@Pivot.com.