Life & Health Insurance/life insurance


Are there some general guidelines/factors to consider when deciding whether to repay a loan against a whole life insurance policy using dividends, cash, or not repay the loan at all?

Dear Vicki,

Repaying the loan always enhances the financial position of the policy owner, since the restored accumulation value is available for new use. This also generates more interest in an environment that is tax-advantaged.

Also, restoring 'cash value' reduces the likelihood paying income taxes at the point of a policy lapse.

Using the dividends is one way to accomplish these goals. However, there is no better place to store money for future use. Adding additional cash compounds the advantages of the participating whole life policies.

Finally, by re-funding the policy by whichever means you choose assures your heirs of the untaxed benefit at your passing.

More comments on this issue are found in Chapter 8 of my report 'Life Insurance and Retirement - the Unvarnished Truth', and in the new book by Pamela Yellen, 'The Bank on Yourself Revolution'. You can acquire the report by e-mailing me at

Willard R. Brumbaugh, LUTCF
CA License 0374776
(888) 792-2379

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Willard R. Brumbaugh, LUTCF, CSFP


I can handle questions concerning life insurance, it`s tax implications, how to determine what is appropriate, and how it fits in one`s estate and retirement planning.


For 2 1/2 years I was an expert on, where for most of that time I was ranked #1. I have been a moderator (instructor) for the Life Underwriters Training Council. I have been licensed since 1969. Organizations I belong to: National Association of Insurance and Financial Advisors - California and the Inland Empire Estate Planning Council. I hold the professional designation of Life Underwriters Training Council Fellow.

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