When it comes to borrowing money, many people in Burlington, North Carolina turn to their financial institution for a loan. Few realize that they can take out a loan against their life insurance policy, provided they have the right type of policy.
To borrow from your life insurance in the first place, you must have a policy that accumulates cash value, such as whole life or universal life coverage. For every year you keep the policy active, it builds tax-deferred cash value. How quickly a policy builds cash value depends on a variety of factors, including the amount of your monthly or annual premiums.
You can borrow against your policy’s cash value of to a certain amount determined by your insurance provider. However, there are plenty of other risks involved:
- As with any other loan, the outstanding amount will accumulate interest.
- If you don’t pay back the loan, the outstanding amount plus interest will be deducted from your death benefit – the amount your beneficiaries will receive when you pass away.
- Your policy’s tax-deferred status only lasts as long as you live. If you have an outstanding balance when you pass away, that amount is subject to taxation.
- If your policy lapses, you may end up with a tax liability that could potentially exceed the policy’s cash value.
Anything can happen on the winding road of life. At Don Allred Insurance, we help people throughout Burlington and the surrounding areas plan for the unexpected by providing effective and affordable personal home, auto and life insurance coverage through our multiple insurance partners. Contact us today to speak to an independent agent if you’re in the market for a new policy or have questions about your existing coverage.
Buying life insurance in Burlington, North Carolina can be an important part of your strategy for protecting your family and planning for your future. If something should happen to you, having a term life insurance policy can provide the money your spouse and children will need to get on with their lives.
All term life insurance is designed to pay out a death benefit if the insured dies at some point during the specified term. If you have a 20 year term life policy and you die after it has been in effect for 10 years, your beneficiaries will receive a payout. The monthly premiums remain the same for the duration of the policy in all term life policies
Term policies can either be level-term or decreasing term. The difference between level-term and decreasing term is that the face value, or death benefit stays the same throughout the level-term policy and it decreases as you get further along in age in a decreasing term policy.
A level-term policy is usually purchased because you want to leave a lump-sum amount of money to you beneficiaries should you die during that term. A decreasing term policy is usually tied to a mortgage or some other long-term debt obligation. This type of policy is sometimes called mortgage life insurance. You buy such a policy because you want to make sure your mortgage will be paid off in the event of your death. As the years go by, the principal amount of your mortgage declines and so too does the dollar amount of insurance coverage. If structured properly, your level of insurance will coincide with the amount remaining on your mortgage as the years go by.
Decreasing term policies have a lower monthly premium than level-term policies because the amount of your coverage decreases over the years. Even if you have a mortgage, you may still want to purchase a level-term policy.
Give us a call and ask an independent agent why it can be smart to buy a level-term policy instead of a decreasing term policy. At Don Allred Insurance, we welcome the chance to answer all of your questions and help you make the right decision about life and all of your other insurance needs.
Having your home inspected for potential risks is an important part of maintaining your property. In the case of a wind loss mitigation inspection, the goal is determining how safe your home is during a storm. When you have an inspection and a professional determines that your house has a low risk, it may have a positive impact on your insurance in Burlington, North Carolina.
Hurricanes and Storms
A key factor that can impact the cost of your homeowner’s insurance is the possible loss of your property. During a hurricane or storm, the risk of damage to your house is very high. Depending on the construction and age of your property, the possibility of a total loss or a large reconstruction project can vary.
Hurricanes and storms can happen at any time, but the damage from wind may be covered under some insurance policies. That is why an inspection can help improve your rates.
Impact of an Inspection
A wind loss mitigation inspection is designed to identify the potential risk and provide advice about the best way to protect against future storms. During the process, a professional will determine if you need to make adjustments to your property so that it is better able to withstand the impact of a hurricane or large storm in the area.
If your house passes the inspection, then some insurers may offer a discounted rate on your property.
The impact of having your house checked is not only related to the safety of your property, belongings and personal life. It can also have an impact on your homeowner’s insurance policy and the coverage that you obtain. Contact Don Allred Insurance to talk to an independent agent for more details about discounts that may be available.