Life Insurance

Is it worth borrowing life insurance?

The real estate boom has Germany firmly under control. Due to the permanently low interest rates, more and more Germans are taking out a loan to buy, renovate or build a house. But not everyone can get used to the idea of ​​borrowing the full amount from the bank; many are looking for other options, for example through life insurance. From a purely statistical point of view, every German has life insurance and since the ECB’s zero interest rate policy makes a good return impossible, life insurance will gladly borrow money to make the desire for your own house a reality }

If the dream home is in need of renovation, then a mortgage loan must be taken out. Anyone who has previously paid into a life insurance policy should take advantage of this and cancel this insurance policy. The surrender value is the secure equity and the loan is then correspondingly lower. The premiums paid so far for the policy can be used for faster and higher repayments. However, everyone who still has an old policy with a high guaranteed interest rate can take advantage of the current interest rate level. In this case, the life insurance should not be sold, only borrowed. The insured retains the current interest rate of up to four percent of the life insurance, but he only pays two percent for the loan and that makes a good interest profit.

Optimizing the financing

In the As a rule, the loan from the insurance policy is not sufficient to take over the complete financing of a property, but such a loan certainly has the potential to optimize the financing. This is especially true if the life insurance policy only has a term of a few years. Only when the contract has reached the originally planned end of its term will the excess be credited at the end. With average contracts, this can easily amount to several thousand euros, a sum that would be lost if the life insurance were terminated. But there is another advantage, because unlike a classic mortgage loan, a policy loan can be repaid whenever the borrower wants. If, for example, an inheritance is made after a few years, then the money can be used immediately and at no additional cost to repay the loan.

If the life insurance is borrowed, nothing changes in the tax privilege. For all policies taken out before January 1, 2005, payments are made without tax being levied on the investment income.

Image: © / tetxu

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