Life Insurance

[CanadianGuitarist 0]

I inexplicably have a 5-year term life insurance worth $25,000. I wound up with it 2 years ago(edit: Wow, it's already 3), when I was told by my agent that I could essentially get it for free thanks to multi-line discount.

 

I'm told I can borrow against it on the following conditions:

1) I have to pay it back, even though I've paid into it

2) If I borrow, say, $5,000 off the $25,000, my beneficiary would only receive $20,000.

 

I called and asked if borrowing against it was possible, but I was told there was no cash value, but by the agent's secretary, not the agent himself. Anyone ever done this? What can I expect?

 

There's two types of life insurance, aren't there? Term and something else? What happens to the $25,000 in 2 years when I'm done paying the 5-year term? Does it just sit until I die or get dismembered? Can I borrow against it then? Does it accumulate interest?

 

 

Fun sidenote: When I was going through the application, my agent asked me if I smoked weed or drank. I seldom blaze anymore, but did quite a bit in college, and I drank a lot of beer then and still do now. I blatantly lied and said I didn't, and he didn't buy it. My acceptance letter says, and this is a quote:

 

"The decision of approval for this insurance is because of excessive drug and alcohol use".

[CanadianChris 0]

You're single, right? No one's depending on you for money? If so, you don't need life insurance.

 

If you can borrow against your insurance, you have a whole life policy. These policies should be avoided. If you got a whole life policy when your agent said you were getting term life, get a new agent.

[kkktookmybabyaway 0]

What Chris said.

 

Oh, and I have that Blue Jays album that contains the song in your avatar line thingy below the bird.

[CanadianGuitarist 0]

No one's depending on me. The pitch he made upon me was that I'd essentially be getting it for free, since the life, compounding with my car, gave me a multi-line discount. It's certainly term...what happens in 5 years? The $25,000 just sits until I die?

 

Is it possible to still apply for whole insurance as you described if I already have term? I'd like to maybe get 10 grand or so to put a down payment on a house and pay some bills off....is it borderline fraud to apply for whole then just borrow against it? Does a credit check or anything come into play? Does it effect my credit to borrow?

[MrRant 0]

Term - http://en.wikipedia.org/wiki/Term_Life_Insurance

 

Whole Life - http://en.wikipedia.org/wiki/Whole_life_insurance

 

 

Term has no cash value while whole may depending on the type. After 5 years, your policy expires and you will either renew it or it will lapse and you won't have any.