--- title: How You Can Help Clients With Whole-Life Policy Loan Woes description: Here's how you can avoid missing an opportunity to aid your clients and grow your business by helping them with their whole-life insurance policy loans. image: https://blog.lwtagency.com/hubfs/LWTwholelifepolicyloanwoes.jpg --- [Skip to content](https://blog.lwtagency.com/whole-life-policy-loans#main-content) [![LWT Agency](https://blog.lwtagency.com/hubfs/lwt-logo-1.png)](https://lwtagency.com) # LWT Agency Since 1927 - [About](https://lwtagency.com/team) - [Services](https://lwtagency.com/services) - [Resources](https://lwtagency.com/resources) - [Get A Quote](https://lwtagency.com/get-a-quote) - [Contact](https://lwtagency.com/contact) - [Producer Insights](https://blog.lwtagency.com) This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. # How You Can Help Clients With Whole-Life Policy Loan Woes [LWT Agency](https://blog.lwtagency.com/author/lwt-agency) Nov 25, 2020, 12:00:00 AM No quod sanctus instructior ius, et intellegam interesset duo. Vix cu nibh gubergren dissentias. His velit veniam habemus ne. No doctus neglegentur vituperatoribus est, qui ad ipsum oratio. Ei duo dicant facilisi, qui at harum democritum consetetur. ![worried elderly man and woman](https://blog.lwtagency.com/hubfs/LWTwholelifepolicyloanwoes.jpg) If you're like most life insurance producers, you're looking to [sell new policies](https://lwtagency.com/accelerate-life-insurance-sales/) to prospects and clients. However, sometimes the gold is sitting right in your backyard. That "gold" being the opportunity to help a client out of a sticky situation with whole-life policy loans. Let's take a look at the problems this type of borrowing can cause and the solution you may be able to provide – helping your client and benefitting yourself and your life insurance business in the process. ## The problem with whole-life policy loans There’s no question that whole-life insurance has been the established norm in the life insurance industry for many years. Guaranteed death benefits, high cash accumulation, and the ability to borrow from the cash value are just three of the many features found in a whole-life policy. Many whole-life policyholders actually take advantage of borrowing from their policy because they can do so on a tax-favorable basis. At least for a while. **That’s because the ability to take loans from that cash value can get clients into trouble.** The right to borrow cash from a policy is one of the few "living benefits" to a policyholder, but most people who buy life insurance do so with a purpose in mind. That purpose is usually to benefit someone other than themselves. But guess what? The ultimate payout to the beneficiary gets reduced by the amount of any outstanding loans. And many people that borrow from their [whole-life policy](https://www.doughroller.net/insurance/life-insurance/pros-and-cons-of-whole-life-insurance/)**never pay that money back.** In fact, most people don't even pay loan interest on their policy loans, which compounds the problem. Most clients are just not aware that over time, if their policy lapses without value, they can find themselves in **a significant taxable situation** if there was a "gain" in the policy. And let's face it, no one likes receiving a 1099! ## The solution for whole-life loan hardships Depending on the circumstances, you may be able to help your clients restructure those older whole-life policies using a 1035 tax-free exchange to: 1. Lower or eliminate a client’s premium. 2. Increase their death benefit. 3. Perhaps both! Sound complicated? It's not. Current IRS regulations allow for the internal transfer of policy values from one policy to another, to different life insurance carriers. This means a client may be able to transfer not just their cash value to a new policy, but also the existing loan without a tax consequence. Restructuring a whole-life policy that has a loan against the cash value, (especially one that is "over loaned") can improve a client's premium payment or death benefit, and sometimes even both. Offer your prospects and clients a [policy review](https://blog.lwtagency.com/qualified-life-insurance-prospects) to see if their existing policy is meeting their expectations. If a client or prospect has an existing whole-life policy and they’ve borrowed from the cash, you may be able to resuscitate that policy and improve their situation. ## Give your clients a whole-life loan rescue **When it comes to selling life insurance, **it's all about finding the money.**** **And a whole-life loan rescue can turn prospects into customers, and customers into loyal clients.** **[![Writing a Large Life Insurance Policy](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/1853399/29752ddc-3eb1-4502-a584-d7c1e1108cd2.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/1853399/29752ddc-3eb1-4502-a584-d7c1e1108cd2)** [Life Insurance Sales Ideas](https://blog.lwtagency.com/topic/life-insurance-sales-ideas) ## Related Posts ### [Nov 9, 2017, 10:32:00 AM What Do You Know About Life Insurance Carriers You Represent?](https://blog.lwtagency.com/what-know-life-insurance-carriers-represent) ### [Dec 8, 2016, 9:04:00 AM How to Place Policies, Close Cases & Win Clients \[VIDEO\]](https://blog.lwtagency.com/how-place-policies-win-clients) ### [May 18, 2021, 12:00:00 AM How to Get Your Case to Sail Through the Life Insurance Underwriting Process \[Video\]](https://blog.lwtagency.com/how-case-sail-underwriting-process) ![LWT Agency](https://blog.lwtagency.com/hs-fs/hubfs/tellus-campaigns/LWT-Color-Print-new2.jpg?width=215&height=112&name=LWT-Color-Print-new2.jpg) Securities offered through Simplicity Group, Inc. 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