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OK, here's the correct answer: You're not "borrowing" your "own" money. You're using the cash value of your policy as collateral for a loan from the insurance company. Like a home equity loan where you pay interest on the loan, using the home as your collateral. So, you borrow from the insurance company and pay it back if you want to. If not, the insurance company will subtract that loan out of the death benefit. Another thing most people don't know (even our "experts" and top contributors)...you continue to earn dividends on your policy as if nothing was ever taken out. Often times, the dividends alone can re-pay the interest on those loans meaning it's a free loan which is TAX-FREE. Also, many times, early in the policy,the dividends are buying additional insurance. Meaning that in 30 yeaars or so, your death benefit is nearly DOUBLE the original face value. So, even if you take a loan out and have the interest paid by the dividends, you'll end up with a higher death benefit than you started with. They don't teach you that at Primerica, do they?

by primericaisbad

5 months ago

Asker's Rating: 

It'll go to collection if you start missing payments. The creditors will call and call. Some are nice. Most never are nice. Your credit will not look good and you won't be able to get credit for a car or house or a credit card. There is probably a clause in your ins. policy that states if you missed however many payments, your ins. is void and null, so you probably will get nothing because those payments you paid will go towards paying your debts. It is borrowing because they are advancing you money you promised to pay each month. So you actually don't have the entire amount, you only have partial. The ins. is then put aside in case you have an emergency - then the policy will kick in. But if you borrow against it, this means the emergency fund is put on hold until you pay it back.

by Helen N- 5 months ago

I think they could sue you for that. I'm not too sure though... LOL.

by Menatsu- 5 months ago

You do not have to pay the money back. If you die the death benefit will be reduced by the amount of the loan. You do have to pay the loan interest once a year or the policy could get overloaned and cancel. And, your last question is a good one. I don't know why they call it borrowing when it is your money. That is why these policies are a big rip off. If you have not had this policy very long you might want to get out now. However, if you have had the policy a long, long time, you are finally getting some benefits from it and it would not be a good idea to cancel it. If there are some dividends in the policy you might see they they are now enough to start paying the premiums for you. In response to Primerica, I am not sure if you are on their side or not. Top contributors do know all about dividends, but it is not often brought up as a question. And, I do agree with Primerica's idea about selling term insurance but do not agree with the way they trick people into selling their insurance and their lies. Their agents are part timers and inexperienced and most do not really know the field of insurance. You do know what your talking about, but that does not mean the policy is a good product.

by car253- 5 months ago

It's not REALLY your money. It's just an excess set aside. That money accrues interest. If you don't keep paying for the policy premium, the policy will cancel, and you don't have to pay the money back. If you die, the insurance company subtracts the loan amount, from the amount of the death benefit. That money REALLY belongs to the insurance company, unless you decide to cancel the insurance. That's why you pay interest on it, when you borrow it, and that's why it comes out of the death benefit, if you die.

by mbrcatz- 5 months ago

Read you policy. Look under loan provisions. You will find you answer.

by Annuity Sleuth- 5 months ago

I DON'T THINK IT IS SOMETHING DANGEROUS.

by Ahil M- 5 months ago