First post, not sure if I posted this correctly re:subreddits: Not sure if this should be posted in finance, banking, insurance, or investing. Just asking for some advice from someone who is knowledgable in this specific area, not looking for other input. My question here is specifically related to real estate in my case, but could be applicable to essentially any "peer-to-peer" loan. I'm taking out a loan from a local businessman who knows me personally very well, and he understands my reasoning for wanting a "peer-to-peer" loan of sorts i.e. non-traditional banking loan in this case. The loan is ~$225,000 for an investment property that I am purchasing on leverage (very safe cash flow, and, worst case scenario if it produces zero income, I can still service the loan for several years and holding period is ~20-30 years, i.e. no panic selling in a downturn), and I am a very low default risk (i.e. 800+ credit score, $275,000+ annual primary income, $50,000 annual passive income, enough liquid assets to service the loan tomorrow, if necessary) and the lender knows this because he knows me personally and is willing to give me a loan in this situation bc frankly he doesn't need an exorbitant return on this sum of money but still wants to earn some return above the ridiculous amount he's just sitting on in cash, however I'm paying a prime plus so it's essentially a win, win, win) My question is, to eliminate essentially ALL risk, I offered to take out an insurance policy and pay the premiums (not sure if a term life insurance policy is necessarily the right verbiage for this type of policy) so my 2 questions are what would this specific type of policy called? I'm sure a specific term policy with him listed as the beneficiary would be sufficient, however there has to be a specific name for a policy of this nature (I'm not a banker or in insurance, hence why I'm asking here) and 2) for taking out a policy of this nature, do I legally need to even disclose why I'm taking out the policy? Or could the insurance company care less so long as I pay the premiums on time; after all, he could be just a family member taking out a traditional term policy with no underlying private note to pay off if I were to pass away.
Submitted December 03, 2017 at 10:08AM by hawkeyes2121 http://ift.tt/2jayOPm
