Cash Value Life Insurance Versus Reversed Mortgages

Have you ever heard that cash value life insurance is great because you will be able to live a "tax free" retirement by taking a loan from your policy?  The first question you need to ask is whether a loan is a liability or an asset and whether you prefer to add liabilities or assets to your portfolio.

You may also compare the option of taking a loan from a cash value life insurance policy with other vehicles which allow you to take loans.

You may also take loans against any asset that you have, such as a retirement account or home.  If you decide to do this, be careful as you may have stipulations in place that determine how many loans you may take against the asset, the details for paying back the loan including who gets the interest and how much percentage of the asset's value you may loan against.

If you take a loan against your home through a reversed mortgage, you may be able to take equity out of your home.  You will be required to pay for home insurance and property taxes to have access to this loan.  This is very similar to having to pay for life insurance to have access to the loan of a cash value life insurance policy.

Which would you do?  Would you rather be forced to pay for the costs related to your home or the costs related to the increasing cost of life insurance?

Read more at www.allrmc.com.

This post was reposted from http://finlit.biz/retirement-2/cash-value-life-insurance-versus-reversed-mortgages/, originally written on February 6th, 2013.