I have a UNIVERSAL LIFE INSURANCE POLICY with Transamerica. I borrowed against my policy about 2 years ago. This was a big mistake!!! You are told you do not have to make any payments as it will be taken out of your policy when you die. What they fail to tell you but is in the fine print is that the interest is charged on the principal balance one year in advance. For example, if you borrow 10,000.00 at 8% interest today, then tomorrow, you now have a 10,800.00 loan balance. ( 800.00 in interest) They do not charge the interest on the principal monthly like most loans, they charge interest only once each year in advance on the total balance of principal and interest combined! They do not separate the principal from the interest, so when you make a payment, it is applied to the total loan balance, the principal plus advanced interest. So you are paying interest on the interest. I only thought this was done by loan sharks. Who knew?
Legal loan shark scam
I have a UNIVERSAL LIFE INSURANCE POLICY with Transamerica. I borrowed against my policy about 2 years ago. This was a big mistake!!! You are told you do not have to make any payments as it will be taken out of your policy when you die. What they fail to tell you but is in the fine print is that the interest is charged on the principal balance one year in advance. For example, if you borrow 10,000.00 at 8% interest today, then tomorrow, you now have a 10,800.00 loan balance. ( 800.00 in interest) They do not charge the interest on the principal monthly like most loans, they charge interest only once each year in advance on the total balance of principal and interest combined! They do not separate the principal from the interest, so when you make a payment, it is applied to the total loan balance, the principal plus advanced interest. So you are paying interest on the interest. I only thought this was done by loan sharks. Who knew?