Bank loans secured by the cash value

Patrick6854

New Member
3
I am looking for a comprehensive list of banks who are offering line of credit or loans secured by the cash value of an IUL.

I have seen some banks doing only WL, some restricting their offers to only some insurer, ...

It would be nice to collect the general wisdom of this forum to compile a list of lender.
 
The banking industry has been burned by extending loans based on Insurance Policies. May not be a very long list
 
Interesting, I would have believed that these were very secured loans compared to others. What did go wrong?
There have been people who have presented false insurance documentation to secure business loans. Some were during an era where banks were handing out money like lollipops. The insurance policies never existed and the loans were used to secure a lifestyle. The banks were burned for millions.
Similar things happened when a celebrity sold a life policy as a viatical to an investor group. Life policies are written knowing that some will cancel long before the person dies and the company gets to keep the premiums paid as profit. When an investor group purchases a life policy their focus is on owning the policy through the death of the individual and getting a payoff. Circumstances such as these make things difficult for honest people
 
Let's clarify a few things here. First, let's not talk about the one-off, soap opera, American Greed type stories where a guy walks into a bank, fraudulent documents, whatever, and applies for a loan using a life insurance policy as collateral. Banks have gotten hurt with numerous types of loans, lines of business, etc. -- from real estate, to (business) lines of credit (for law firms and medical practices), to the horse business, to machinery, and so on.

Second, there are major, national banks/financial institutions, that have formal cash value line of credit programs. They developed departments and formal programs for it. It's not a one-off, on occasion, etc. They are in this business, and in it with billions of dollars of business on the books. Most commonly, they are in fact for -- whole life policies, from "Triple A" rated, mutual companies.

The line of credit terms/conditions most common are -- 2 to 4 year terms, easy renewal, no clean up, interest only payment option, borrow between 90 and 95% of the cash value, and the most common rate I've seen is the WSJ Prime minus anywhere between 1/2 and 1 3/4% depending on the size of the line. I've seen fixed rate options as well. The banks I've seen have no application fees, closing costs, etc. Usually a short application with 24-48 hour approval. Non-recourse, and depending on the bank, the loan may not appear on your credit report. The credit can be increased without a hard inquiry or credit pull. The reason for this is...very simply...the bank has no risk. None. The bank uses a collateral assignment form, the insurer's form, gets all their i's dotted, and their t's crossed, and so does the insurance company. The cash value in a WL policy is guaranteed -- why do you think the bank is offering such favorable terms. I've taken this idea to bank that I have working relationships with -- and they've done all the due diligence, went through everything, and they've done it! One bank I brought it to now has in excess of $1 billion -- yes, that's billion, with a "B" -- on the books.

I have seen banks, financial institutions, and trust companies loan money -- not a formal program or department and not a line of credit -- against other types of life insurance, but the loans were very different than what I described above. It was more of a one-off, but it was a very legitimate transaction, and more like a regular loan where a client is borrowing against real estate or some other asset. It was traditional underwriting.

I have seen smaller, regional banks loan against other types of life insurance, but I've never had any client engage in this type of transaction. I had a client borrow $5mm from a monster bank, using a UL policy as collateral. The bank did their due diligence and scrutinized that policy big time, LOL. The rate was very favorable at the time. It was a two year loan. The bank included some very specific terms and conditions -- over and above the collateral assignment. For example, the premiums had to be paid, and on time, or else the loan would automatically be called via the collateral assignment. No changes to policy features or death benefit options. The bank had to be copied on all correspondence. And, the bank ordered in-force illustrations numerous times throughout the two years! LOL.

Remember, argue all you want, debate all you want -- from the bank's perspective, risk, collateral, a WL policy is very, very different than a UL, IUL, VUL, and so on. Extremely different. Period.
 
I am looking for a comprehensive list of banks who are offering line of credit or loans secured by the cash value of an IUL.

I have seen some banks doing only WL, some restricting their offers to only some insurer, ...

It would be nice to collect the general wisdom of this forum to compile a list of lender.

If you know them, and have a relationship with them, then I would suggest you ask the "external" wholesaler -- ones who are very smart, knowledgeable, have been in the field a long time, etc. -- who handles large amounts of IUL.

In addition, while they don't do it -- check with some of the bigger lenders who do have formal programs for cash value line of credit for whole life -- as they may know the smaller, state and/or regional players who do loan against IUL.

Good luck!
 
Let's clarify a few things here. First, let's not talk about the one-off, soap opera, American Greed type stories where a guy walks into a bank, fraudulent documents, whatever, and applies for a loan using a life insurance policy as collateral. Banks have gotten hurt with numerous types of loans, lines of business, etc. -- from real estate, to (business) lines of credit (for law firms and medical practices), to the horse business, to machinery, and so on.

Second, there are major, national banks/financial institutions, that have formal cash value line of credit programs. They developed departments and formal programs for it. It's not a one-off, on occasion, etc. They are in this business, and in it with billions of dollars of business on the books. Most commonly, they are in fact for -- whole life policies, from "Triple A" rated, mutual companies.

The line of credit terms/conditions most common are -- 2 to 4 year terms, easy renewal, no clean up, interest only payment option, borrow between 90 and 95% of the cash value, and the most common rate I've seen is the WSJ Prime minus anywhere between 1/2 and 1 3/4% depending on the size of the line. I've seen fixed rate options as well. The banks I've seen have no application fees, closing costs, etc. Usually a short application with 24-48 hour approval. Non-recourse, and depending on the bank, the loan may not appear on your credit report. The credit can be increased without a hard inquiry or credit pull. The reason for this is...very simply...the bank has no risk. None. The bank uses a collateral assignment form, the insurer's form, gets all their i's dotted, and their t's crossed, and so does the insurance company. The cash value in a WL policy is guaranteed -- why do you think the bank is offering such favorable terms. I've taken this idea to bank that I have working relationships with -- and they've done all the due diligence, went through everything, and they've done it! One bank I brought it to now has in excess of $1 billion -- yes, that's billion, with a "B" -- on the books.

I have seen banks, financial institutions, and trust companies loan money -- not a formal program or department and not a line of credit -- against other types of life insurance, but the loans were very different than what I described above. It was more of a one-off, but it was a very legitimate transaction, and more like a regular loan where a client is borrowing against real estate or some other asset. It was traditional underwriting.

I have seen smaller, regional banks loan against other types of life insurance, but I've never had any client engage in this type of transaction. I had a client borrow $5mm from a monster bank, using a UL policy as collateral. The bank did their due diligence and scrutinized that policy big time, LOL. The rate was very favorable at the time. It was a two year loan. The bank included some very specific terms and conditions -- over and above the collateral assignment. For example, the premiums had to be paid, and on time, or else the loan would automatically be called via the collateral assignment. No changes to policy features or death benefit options. The bank had to be copied on all correspondence. And, the bank ordered in-force illustrations numerous times throughout the two years! LOL.

Remember, argue all you want, debate all you want -- from the bank's perspective, risk, collateral, a WL policy is very, very different than a UL, IUL, VUL, and so on. Extremely different. Period.
Any insurance company will allow you to borrow against your cash value. I read the OP as if he wanted a BANK to loan against cash value and many have gotten away from the practice because stopping payments to the policy starts to lower the cash value as premium is subtracted.
 
Any insurance company will allow you to borrow against your cash value. I read the OP as if he wanted a BANK to loan against cash value and many have gotten away from the practice because stopping payments to the policy starts to lower the cash value as premium is subtracted.

My post only speaks to BANKS and other financial institutions lending against the cash value of life insurance. If your experience is many have gotten away -- I am saying that in my experience, I've seen many (the WL element) get into in the last 36 months. They solicit me all the time. I've personally brought three banks into this line of business and I know banks that have been in it for many years.

As far as the stopping payments, I am guessing you are talking about premium payments and a premium that is paid via cash value...one, on WL, that is not the only way to pay a premium due...and two...while using CV to pay a premium might create a loan...there is a corresponding increase in cash value once the premium is paid (plus a dividend)...you would have to look at the details and specifics of a specific case, policy, etc.

That said -- no bank that loans against the CV of WL policies would ever be concerned about a premium payment not being paid. There is a great deal of flexibility and options, but all of this is outside the scope of the original question.
 
Let's clarify a few things here. First, let's not talk about the one-off, soap opera, American Greed type stories where a guy walks into a bank, fraudulent documents, whatever, and applies for a loan using a life insurance policy as collateral. Banks have gotten hurt with numerous types of loans, lines of business, etc. -- from real estate, to (business) lines of credit (for law firms and medical practices), to the horse business, to machinery, and so on.

Second, there are major, national banks/financial institutions, that have formal cash value line of credit programs. They developed departments and formal programs for it. It's not a one-off, on occasion, etc. They are in this business, and in it with billions of dollars of business on the books. Most commonly, they are in fact for -- whole life policies, from "Triple A" rated, mutual companies.

The line of credit terms/conditions most common are -- 2 to 4 year terms, easy renewal, no clean up, interest only payment option, borrow between 90 and 95% of the cash value, and the most common rate I've seen is the WSJ Prime minus anywhere between 1/2 and 1 3/4% depending on the size of the line. I've seen fixed rate options as well. The banks I've seen have no application fees, closing costs, etc. Usually a short application with 24-48 hour approval. Non-recourse, and depending on the bank, the loan may not appear on your credit report. The credit can be increased without a hard inquiry or credit pull. The reason for this is...very simply...the bank has no risk. None. The bank uses a collateral assignment form, the insurer's form, gets all their i's dotted, and their t's crossed, and so does the insurance company. The cash value in a WL policy is guaranteed -- why do you think the bank is offering such favorable terms. I've taken this idea to bank that I have working relationships with -- and they've done all the due diligence, went through everything, and they've done it! One bank I brought it to now has in excess of $1 billion -- yes, that's billion, with a "B" -- on the books.

I have seen banks, financial institutions, and trust companies loan money -- not a formal program or department and not a line of credit -- against other types of life insurance, but the loans were very different than what I described above. It was more of a one-off, but it was a very legitimate transaction, and more like a regular loan where a client is borrowing against real estate or some other asset. It was traditional underwriting.

I have seen smaller, regional banks loan against other types of life insurance, but I've never had any client engage in this type of transaction. I had a client borrow $5mm from a monster bank, using a UL policy as collateral. The bank did their due diligence and scrutinized that policy big time, LOL. The rate was very favorable at the time. It was a two year loan. The bank included some very specific terms and conditions -- over and above the collateral assignment. For example, the premiums had to be paid, and on time, or else the loan would automatically be called via the collateral assignment. No changes to policy features or death benefit options. The bank had to be copied on all correspondence. And, the bank ordered in-force illustrations numerous times throughout the two years! LOL.

Remember, argue all you want, debate all you want -- from the bank's perspective, risk, collateral, a WL policy is very, very different than a UL, IUL, VUL, and so on. Extremely different. Period.

I missed the part of your email that helped by listing the bank names that offer this as a service
 
So far for WL I have found through search engine:
Valley.com
investorsbank.com
coastalstatesbank.com
amerisbank.com

But for IUL I am still looking...
 
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