Premium Deposit Fund
For Premium Deposit Fund:
Premium Deposit Fund
Can I pay my premiums annually and then make payments to my policy in preparation for next year’s premium payments?
The answer is yes, you can, it’s always good to put money in on an annual basis for policy premium, then you can start saving money for your next year’s premium.
The saving of money will go into something called a premium deposit fund. As the name says, it’s basically a savings account for your future premiums.
Now, you may earn interest in this premium deposit fund, as it’s no different than saving money in a commercial bank account. You might earn interest in this premium deposit fund, and any interest of your own is going to be tagged to you.
The other question to this is, if you’ve withdrawn money from premium deposit fund does it. trigger taxes? If you’re just withdrawing your portion of money back, there is no tax on it. But if there’s any interest that you’ve earned in this premium deposit fund, you have to pay tax on the interest that is earned.
How does the money sitting in my premium deposit fund impact my dividends
There are two ways for you to save money for your premium:
1)You can save that money in a commercial bank. Now what is money to the commercial bank, that money is inventory. And like any of the business, commercial banks do not let the inventory sit still, they start to put that inventory to work, by lending with security and make more profit for the owners of the bank. You may or may not be the owner of the bank.
2) If you’re saving this money inside an insurance company with which of who you have a participating dividend paying whole life policy. You’re already giving money to this insurance company ahead of time, that insurance company will now put that money to work for you and everybody else who has a participating dividend paying whole life policy, because no different than a commercial bank money to the insurance company’s inventory. And they have to put that money to work to make more profit for you.
Example: If you own the Costco grocery store, do you ever want any of your groceries sitting in Walmart so that Walmart make more money by selling that in selling those groceries? The answer is no. Likewise, if you own insurance company because your co-owner of the insurance company Don’t you want all your money sitting in your business that you can own? So ultimately, it’s gonna make our dividends better because we are giving the insurance company money in advance and they can put that money to work and make more profit for us and everybody else who has a participating dividend, whole