Bruce Brown fell into the life insurance policy loan trap.
Mr. Brown, a commercial litigation attorney, purchased a life insurance policy from Northwestern Mutual Life Insurance Company (Northwestern). For the first six and a half years, he paid the insurance premiums by check. For the next 15 1/2 years, he paid the premiums by borrowing at 8 percent interest against the policy’s cash value.
Because of the borrowing, the year 22 annual interest accrual was twice the insurance premium due. This was ... Log in to view full article.