No. of Recommendations: 0
LadyIanna: "The three policies with Commonwealth have loans on them. He has been getting loan interest due notices for years that he does not pay. The interest amounts have been capitalized into his loans. I don't have all the information, but I believe the interest rates on all 3 loans is 5%. The premiums are being paid auto-magically on a monthly basis.


Loan 1 $4,539.81 (ordinary life policy)
Loan 2 $5,328.24 (low rate life policy)
Loan 3 $6,956.61 (low rate life policy)"



How much net insurance does he have, i.e., poliy amounts minus the loan balances?

"I'm trying to decide if it is cost effective to 1: start making payments on the loans, or 2: to pay just the yearly interest due, or to 3: not pay anything on them other than the premiums.(which is what Dad had been doing.) Maybe snowball them?"

Does your father have the assets to easily pay these loans?

"I'm in the process of changing the beneficiary over to my mother. (previously was my oldest brother who is now deceased.) We are planning on putting the family house up for sale starting in the spring, and still owe an equity loan on the house. (possibly rent to owning house? something else I need to research)(mom, 84, currently in an apartment, family home is in need of repairs.)"

Assets to perform the repairs?

"Dad does not currently have a burial plan. I think the plan was to use the insurance payout to bury him; when the time comes."

The insurance pay-out will belong to the named beneficiary. Will he or she use the pay-out to cover funeral costs? And will the proceeds be available before the bills are due? Also, is the sum of the net pay-outs greater than the expected funeral costs?

Last, you mention an equity loan, and do not recite whether there are any other loans. 5% is relatively inexpensive cost of funds and I would likely concentrate on paying any higher interest rate loans before the insurance loans.

Regards, JAFO
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