Content Overview
- Summary
- The Seven Steps To Take Before Asking For A Friendly Loan Against A Life Insurance Policy
- Tips About Who To Approach To Lend Money Against A Life Insurance Policy
- Once Someone Agrees To Make A Loan Based On Your Life Insurance Policy, How To Put The Transaction On A Business-Like Basis
- What To Include In A Loan Agreement Using A Life Insurance Policy As Collateral
Friendly Loans Against Your Life Insurance Policy
Once Someone Agrees To Make A Loan Based On Your Life Insurance Policy, How To Put The Transaction On A Business-Like Basis
Next » « Previous4/5
Step 1. Speak with the potential friendly lender and work out an agreement.
Include such things as:
- The amount you're borrowing.
- The interest to be paid.
- When you expect to be able to pay back the loan.
Step 2. Put your agreement in writing.
A written agreement is a professional approach which lets the person know you take the arrangement (and your relationship) seriously. It helps define each of your understandings and expectations. See below, What To Include In A Loan Agreement Using Life Insurance As Collateral.
Think about using an attorney to do the paperwork. Because of the complexity of the arrangement, you are better off using an attorney to draft the appropriate paperwork unless you have a legal background.
Instinct may indicate that this isn't necessary because we're talking about an agreement among friends or family members. Actually, the fact that it is an agreement among friends or family members may be reason enough to have an independent person draft the papers so there is no mis-understanding or feeling that a relationship is being abused.
If you are intent on writing an agreement yourself, there are no do-it-yourself forms of which we're aware. You can start with a collateral loan form available in your local stationary store, or online through such sites as www.uslegalforms.com . The form most likely to work is generally known as a Secured Promissory Note. These forms generally refer to real property, but can be modified for an insurance policy.
Make sure the form was created for use in your state so it is meets the state's requirements for legality.
Step 3. Contact the insurance company to actually make the beneficiary designation you agreed to.
Step 4. Give a copy of the paperwork identifying the beneficiary to your friendly lender.
Step 5. As you make premium payments, forward a copy of the cover note to the lender.
Whether or not this step is required under your agreement, the courtesy will let the lender know you continue to respect your agreement -- and the lender.
Please share how this information is useful to you. 0 Comments
Post a Comment Have something to add to this topic? Contact Us.