Paying back policy loans sooner increases overall efficiency. Important: This module is intended to demonstrate how accelerating payments to repay a loan in the Private Reserve Strategy® benefits the client. Once the loan has been repaid and the private reserve is whole again, the extra income the client is now accustomed to using for the loan repayments can be directed to making the client's financial foundation even stronger. If the client has the need for the death benefit, they may even decide to purchase an additional life insurance policy. Again, the source for the premium would be new money from the client's income, now no longer needed to repay the private reserve loan. Never suggest to clients to use existing cash value or loans against their life insurance policies to purchase additional life insurance. This would be an inappropriate and unsuitable replacement sale. |
The efficiency enhancer allows you to utilize the private reserve strategy, but make it even more efficient. Let me explain. You have money in your private reserve, your life insurance contract as cash value - that is your collateral capacity. You want a loan, so you go to the insurance carrier and you borrow the money against your cash value. Now, to enhance efficiency, you want to make accelerated principal and interest payments. Not only do you want to pay what they suggest, in this example over four years, you want to do so quicker. The faster you pay back principal and interest the less you're going to lose in that situation. Once the loan has been satisfied, you will still have cash flow coming from your lifestyle account that you can use to make extra payments. Where can those extra payments go? You can put more money in the policy you already have - if it hasn't already reached the MEC limit. If it's full, you may consider purchasing additional policies (or tanks) that would allow you a larger reserve capacity for your money. So you private reserve could grow to encompass multiple policies (or tanks) over time. |
No math presented on this screen. |