Fill Out Your Policy Loan Request Form

What is the Policy Loan Request form and who can use it?

The Policy Loan Request form allows policy owners to request a loan against their life insurance policy. This form can be completed by the owner of the policy, and if the policy has a joint owner or an assignee, those individuals must also provide their signatures. It is important for policy owners to understand the terms and conditions related to policy loans before submitting the form.

What are the conditions for borrowing against my policy?

You can borrow up to 90% of the cash value of your policy after the first year, minus any surrender charges and outstanding loans. The minimum loan amount is set at $500. When you request a loan, the funds will be taken from your policy's subaccounts and moved to the Loan Reserve, which acts as collateral for the loan. This collateral does not participate in the subaccounts' investment experience.

How long does it take to receive the loan funds?

Generally, you can expect to receive your loan funds within seven days of the completed request, provided all required information is included. The company reserves the right to charge a fee for processing the loan, which might affect when you get your money.

What happens to my policy if I do not pay back the loan?

If the total amount of the loan plus interest surpasses the total account value of the policy, the insurance company will notify you and any assignees. If you do not repay the excess within 61 days after the notification, your policy risks lapsing. It is crucial to stay informed about the outstanding loan balance to maintain your policy’s coverage.

Can I repay my loan at any time?

Yes, you may repay your loan at any time while the policy is active. Any repayments will generally be recorded as premium payments unless you specify that they are to be applied toward the loan balance. Keeping clear records of your payments can help prevent any confusion.

What are the tax implications of a policy loan?

Taking out a loan against your policy may have adverse tax consequences. It's advisable to consult with a tax advisor before proceeding with a loan request. Understanding these implications can help you make informed decisions about the impact on your financial situation.

What types of disbursements are available for loan funds?

You can choose how you wish to receive your loan funds. Options include regular mail, overnight delivery (which incurs a fee), or wire transfer (also incurring a fee). Make sure to indicate your preferred method clearly on the request form to ensure timely processing of your loan funds.

When filling out the Policy Loan Request form, it's important to avoid common mistakes that can delay processing. One mistake people often make is forgetting to include their policy number. This number is essential for identifying your account and ensuring that your request is processed correctly. Without it, your application may get delayed or even rejected.

Another frequent error is neglecting to update their address or telephone number. If you have changed either recently, it is crucial to provide the new information. The company may hold your payment for up to 10 business days or require additional verification if there have been changes within that period. Failing to report these changes can slow down the loan application process.

Some individuals overlook the disbursement method choices when completing the form. Selecting how you would like to receive your funds is vital. Failure to choose one option could lead to confusion about how to deliver your loan amount. Always indicate whether you prefer regular mail, overnight service, or a wire transfer.

Additionally, signing the form can be a stumbling block. Many applicants forget to provide all necessary signatures, especially in cases of joint ownership or when a Power of Attorney is involved. Ensure that all required parties have signed to avoid processing delays and confirm that you have included your signature as the policy owner.

Another common mistake is assuming that any payments made are automatically applied as loan repayments. It’s essential to clearly indicate if you intend for payments to count as loan repayment rather than regular premium payments. Miscommunication here could lead to complications when you intend to repay your loan.

Lastly, some people do not consider the potential tax consequences of taking out a policy loan. This decision could impact your policy's coverage in the long term. It is advisable to consult with a tax advisor before making your request. Being informed can help you avoid unexpected problems in the future.

When submitting a Policy Loan Request form, there are several other documents and forms that may also be needed to streamline the process. Here are five important ones that you might encounter:

• Authorization for Release of Information: This form allows the insurance company to obtain necessary information regarding the policy owner's financial or personal details from third parties. It ensures transparency and allows for accurate processing of the loan request.
• Medallion Signature Guarantee: Required for withdrawals of $500,000 or more, this document verifies that the signatures on the Policy Loan Request form match the ones on file and are legitimate. It must be provided by an authorized financial institution.
• Loan Repayment Agreement: This outline details the terms and conditions related to loan repayment, including interest rates and repayment schedules. It helps the policy owner understand their obligations after taking the loan.
• Policy Change Request Form: If there are recent changes to the policy, such as an address change, this form notifies the insurer of these adjustments. It ensures that all communications reach the correct location and parties involved.
• Power of Attorney (POA): If someone is acting on behalf of the policy owner, a POA document must be provided, authorizing them to make decisions related to the policy. This is critical for ensuring that the request is handled appropriately.

Having these documents completed and ready can greatly enhance the efficiency of processing your Policy Loan Request. It is always advisable to double-check that all necessary paperwork is submitted to avoid delays.

• Loan Agreement: Similar to the Policy Loan Request form, a Loan Agreement outlines the terms and conditions under which a borrower may access funds. Both documents clarify payment obligations and consequences of non-payment, helping to manage expectations.

• Mortgage Application: Much like the Policy Loan Request, a Mortgage Application requires detailed personal and financial information. Both forms aim to assess the borrower's ability to repay, ensuring proper documentation is in place to secure the loan.

• Credit Application: A Credit Application is comparable as it also evaluates an individual's creditworthiness and collects relevant personal data. Both documents facilitate the lending process by gathering essential background information.

• Withdrawal Request Form: Similar in function, a Withdrawal Request Form is used to access funds from accounts like retirement plans. Each form outlines the procedure for accessing funds and specifies any limitations or conditions.

• Refinance Application: Like the Policy Loan Request, a Refinance Application seeks to adjust the terms of an existing loan. Both documents require a review of the current financial situation and may affect the overall debt commitment.

• Payment Authorization Form: This form is similar, as it allows individuals to authorize automatic payments for loans. Both forms deal with the management of loan payments, ensuring proper handling of the borrower’s accounts.

• Insurance Claim Form: Just as the Policy Loan Request deals with using a policy for financial assistance, an Insurance Claim Form seeks to access benefits under an insurance policy. Both processes ensure that policyholders understand their rights and obligations.

• Power of Attorney Document: Much like the Policy Loan Request, having a Power of Attorney allows someone to act on behalf of another. Both forms require signatures and can significantly affect decisions regarding financial matters.

• Account Change Request: An Account Change Request can be seen as similar, focusing on updating personal information with a financial institution. Both forms emphasize the importance of keeping records current and accurate to protect financial interests.

• Release of Information Form: This form is comparable in that it grants permission for institutions to share personal information. Both documents ensure that the individual maintains control over who can access their sensitive data.

When filling out the Policy Loan Request form, it is important to follow certain guidelines to ensure a smooth process. Here are eight essential do's and don'ts:

• Do provide accurate and complete information in all fields.
• Do ensure your signature matches the name on the policy.
• Do verify if the correct disbursement method is selected.
• Do consult a tax advisor before requesting a loan.
• Don't leave any required sections blank; this may delay processing.
• Don't request a loan amount exceeding 90% of the cash value minus charges.
• Don't ignore the necessary signatures needed for joint policies.
• Don't assume that payments will automatically apply to loan repayment unless indicated.

Following these guidelines can help prevent issues and ensure a timely response to your loan request.

• Policy loans are free money. Many believe that taking out a policy loan means accessing funds without any repercussions. However, loans accrue interest and must be repaid; otherwise, they can reduce the death benefit and surrender value of the policy.
• All loan requests are processed instantly. Another common misconception is that once the request is made, funds will be received immediately. In reality, it often takes up to seven days for the owner to receive the loan amount after the request is properly submitted.
• Policy loans do not affect the overall policy. Some individuals think that borrowing against their policy would have no effect on their coverage. Unfortunately, loans decrease the death benefit and net surrender value proportionally to the outstanding amount.
• You can borrow 100% of your policy’s cash value. Many policyholders assume they can take out any amount up to their cash value. In truth, the maximum loan amount is capped at 90% of the cash value, minus any surrender charges and outstanding loans.
• You cannot repay a loan once it is taken. Some feel that once a loan is secured, they cannot make repayments until the policy is canceled. On the contrary, repayments can be made at any time while the policy remains active.
• Tax consequences of policy loans are negligible. A frequent belief is that loans won't lead to any tax implications. This is misleading, as policy loans may create adverse tax consequences, which can jeopardize the policy’s coverage. Consulting a tax advisor is strongly recommended before proceeding.
• Address changes do not affect loan processing. Many don’t realize that updating an address could delay a loan request. If an address change occurs within ten days of making a loan request, the company might hold payment for an extended period or reject the request entirely.
• A notary is enough for signature verification. Some think that notarizing signatures suffices for the withdrawal process. However, a Medallion Signature Guarantee is necessary for certain withdrawals, particularly amounts exceeding $500,000 or for different payee addresses.

Here are key takeaways for filling out and using the Policy Loan Request form:

• Policy Information: Clearly write your policy number and the names of the owner and insured on the form.
• Address Changes: If there’s been a change of address within 10 days of the loan request, the company may delay processing.
• Loan Amount: You can borrow up to 90% of the cash value after the first policy year, with a minimum loan amount of $500.
• Loan Setting: The requested loan amount will be deducted from your subaccounts and placed in the Loan Reserve as collateral.
• Processing Time: Typically, loan amounts are sent to the owner within seven days after a proper request is received.
• Loan Repayment: You can repay the loan at any time, which will increase both your death benefit and net surrender value.
• Tax Considerations: Policy loans can have adverse tax consequences. It's advisable to consult a tax advisor.
• Lapse Risk: If the loan plus interest exceeds the total account value, notice will be sent. If unpaid after 61 days, your policy may lapse.