Your HELOC can fund your policy
Did you know your Home Equity Line of Credit (HELOC) can actually fund your policy?
Yes! It’s possible!
It is not often that our customers use their HELOC to fund their first policy, simply because they didn’t know it was possible. But watch as I explain below how it, in fact, is!
Let’s say for example, you have a HELOC worth $150k to use. Regardless of whether or not that amount is similar to or quite different from what you have available to use, this is just intended to be an example. You can use this same process for any amount.
The HELOC is automatically going to charge 5% interest for any money borrowed there. So in this example, the policyowner is going to start with $50,000 as their annual premium deposit into their policy contract.
$20,000 of that is out-of-pocket, and $30,000 of that is coming from the policyowner’s Home Equity Line of Credit. This split will continue for 5 years, until all of the available funds in the HELOC have been exhausted.
Of course, the policy starts producing cash value right away. And if you’re familiar with how a HELOC works, you also know you’ve got interest to pay for borrowing that money. So you can use the cash from the policy in order to make sure that you have enough money to cover the interest charges.
But here’s the good news:
After that same five year starting period, if you look at the cash value cumulative growth, you’ll see you have more than enough money to pay your HELOC completely to 0. So, of course, we do that and we stop that interest charge.
Year 6 then marks the start of a reduction in premiums, down to $20,000 (since the HELOC was used up). It becomes clear that after this point, the cash values, when speaking relative to the new, lower premium, are substantial. This is evidence to the fact that using a HELOC to jumpstart your policy is hugely beneficial.
When you’re ready to get started on creating your financial legacy or if you have more questions, most questions can be answered by watching this video. Start there and then schedule a consult with my team when you’re ready to begin.
