Category: Business and Money > Finance
Asked by: bill789-ga
List Price: $10.00
30 Jan 2004 15:43 PST
Expires: 29 Feb 2004 15:43 PST
Question ID: 301939
My life insurance policy states that the annual interest rate paid on accumulated value is 5% on accumulated value not loaned and 6% on accumulated value loaned. Why is interest higher if I have a loan on my policy?
Re: Life Insurance
Answered By: ragingacademic-ga on 30 Jan 2004 17:05 PST
bill789 - thanks for submitting your question to our forum. The answer is quite simple - there are two reasons the interest paid on accumulated value loaned is higher: 1) The insurance company can afford to pay you more because you are a more profitable customer for them; you are not just making your policy payments, you are also paying interest (or else interest is somehow factored into your monthly payments) 2) The insurance company would also like to incentivize you to take out such loans because this provides them with an additional opportunity to make money. Please let me know if you have additional questions or need any clarification concerning this reply. thanks, ragingacademic
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