One of the most frequent questions I receive is about taking policy loans. This post is designed to help you better understand how policy loans work.
First I want to start with an important distinction…
When you take a policy loan, the loan is being borrowed from the insurance company, NOT your policy. Your full cash value remains in your policy but acts to collateralize the loan from the company.
Your available cash value will be reduced by the amount of the outstanding loan and any interest owed. As you repay the loan your available cash value increases. Although you are repaying the insurance company, you are in essence repaying yourself since you now have that additional cash unencumbered and once again available to use as you please.
This brings me to a very important point. Since your cash remains in your account it will continue to grow at the same guaranteed rate it always has. In other words, you will enjoy growth on the entirety of your cash value even while it is collateralizing the borrowed money. This allows you to enjoy the maturity of money principle. In case you are not familiar with the maturity of money concept I recommend you watch Bruce Reimer’s short video on the subject. (www.chirowealthblog.com/maturity password: chirowealth144)