How to Get a Loan From Gerber Life Insurance
Knowing How to Get a Loan From Gerber Life Insurance can be a quick and easy way to get cash in hand when you need it, there are a few specifics to know before borrowing. Most importantly, you can only borrow against a permanent or whole life insurance policy.
Before we precede, it will be nick you get to know everything you need to know about borrowing a loan from Gerber Life Insurance company.
- Learn More about what life insurance loan is and how it works
What is a Life Insurance Loan?
A life insurance loan is when a policy owner takes money out of their policy from the available cash value.
The money is not taken out in a surrender, so it does not permanently reduce the death benefit of the policy. It must, however, be paid back or the death benefit is reduced by the amount of the outstanding loan when a claim is filed.
While the loan is outstanding, it does accrue interest which adds to the balance of the loan. If the loan plus the interest accrued becomes too large, it may cause the policy to be surrendered, so it is important to understand and manage your balance.
- Borrowing from your life insurance policy can be a quick and easy way to get cash in hand when you need it.
- You can only borrow against a permanent or whole life insurance policy.
- Policy loans are borrowed against the death benefit, and the insurance company uses the policy as collateral for the loan.
- Life insurance companies add interest to the balance, which accrues whether the loan is paid monthly or not.
- You may also want to know How to Cash Out your Gerber Grow Up Plan
The Difference Between Loans, Withdrawals, and Surrender
You’ve likely heard of policy withdrawals and surrender. They differ from life insurance loans in a few notable ways.
- Loans: With a loan, you’re borrowing against the cash value of your policy.
- Withdrawals: A withdrawal reduces your policy’s death benefit and cash value. When you make a withdrawal, the cash is subject to taxes if you take out more than you paid in premiums. It also permanently reduces the amount available to you in the future.
- Surrender: A full surrender involves canceling your policy in exchange for the surrender or cash value of your policy while a partial surrender is similar to withdrawal, removing some cash, but still keeping your policy in force.
Most policies have a surrender charge for the first 10 to 15 years of the contract. The surrender charge is subtracted from the cash value that is paid to you.
- Borrowing from your life insurance policy can be a quick and easy way to get cash in hand when you need it.
- You can only borrow against a permanent or whole life insurance policy.
- Policy loans are borrowed against the death benefit, and the insurance company uses the policy as collateral for the loan.
- Life insurance companies add interest to the balance, which accrues whether the loan is paid monthly or not.
- Learn More: What Is Cash Surrender Value of Life Insurance?
Tips For Getting A Loan
You can borrow money from Gerber life insurance that has a cash account for use while the insured is alive. But here are three pitfalls to avoid:
- Don’t reduce the death benefit: Taking money out of the life insurance policy while you are alive could reduce the survivor benefit.
- Don’t tamper with the guarantee: Permanent insurance guarantees are based on certain assumptions. Chief among these is that you will stick to your premium payments and accumulate cash at a certain level. If you take cash out, you may deplete the amount required to ensure the guarantee.
- Don’t end up paying more money: Some permanent policies will even ensure the guarantee when you take out cash, but at a cost that could force you to pay more premium to cover the difference.
How to Request a Loan
A loan is typically a fairly simple to request. A call to Gerber insurance companies’ customer service line, or to your agent will allow you to request the loan. You do not usually need to fill out any paperwork, but you may need to sign a form if your company requires it.
Before you request a loan, verify the amount of available cash value and the total balance available for loan. Make sure you understand the interest rate as well, because it will not be an insignificant percentage. The loan will be paid either directly into your bank account, or a check will be sent by mail. You may be able to request expedited shipping if necessary.
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How to Get a Loan From Gerber Life Insurance
#You can borrow against the cash value of your policy. Let’s say that your car breaks down, or your child needs some extra cash for college costs, or maybe you’re between jobs and need some extra cash flow.
No matter the financial emergency, you can borrow money against your policy’s cash value. It’s a lot like taking out a loan, but it’s more like borrowing from yourself rather than from another financial institution. However, the loan amount will reduce the policy’s coverage amount until the loan is paid back. (Policy loan interest is 8%.)
#If you ever decide to turn in your policy, you would receive the accumulated cash value that has been building over time, less any outstanding debt against the policy.
Keep in mind that your policy’s cash value continues to accumulate as long as premiums are paid. The monthly premium amount you pay when your Gerber Life Whole Life coverage starts automatically locks in, so it’s the same amount you’ll pay throughout the life of your policy. Since premium rates are largely based on your age when you apply, the sooner buy a policy, the lower your lifetime premium rate.
If you want to Get a Loan From Gerber Life Insurance or have any questions about how the cash value component of a whole life policy works, they will happy to help. Call Gerber Life at 1-800-425-7542 today to get a loan.