Q&A: should I repay a life insurance loan?
Question by Nightflyer: should I repay a life insurance loan?
I borrowed $ 5000 from a whole life policy several years ago. I get a statement every 6 months saying I owe interest and am encouraged to repay the loan. Should I pay it back or just pay the interest now and then so the loan amount doesn’t become larger than the cash value, causing the policy to be terminated?
Best answer:
Answer by Ginger
Does your family need the total amount of the death benefit? If you don’t pay the loan back, the balance of the loan, plus interest, will be subtracted from the death benefit at the time of your demise, when a claim is made.
If you have plenty of coverage, less the loan and interest balance, then just pay the interest.
Give your answer to this question below!
If you need the life insurance then at least pay the interest.
Your question can not be answered here without a lot of personal information being provided, like what is your health, age, do you want people that depend on you for support, ect. You do not need to answer those questions here, but you need to ask yourself those questions to decide if you need the life insuance policy or not. You should speak to your agent because they have all your info and can best advise you.
I think you’re asking the wrong question.
The question should be, “do I NEED life insurance right now, and if I do, is this the best, cheapest policy to fit my needs?”
If you don’t need to keep this life insurance policy, let it lapse, or even cancel it for the remaining cash surrender value. If you DO need to keep this life insurance, pay the loan.