Best (whole life) "cash value line of credit" program?

[PrivClientSG]

Hope everyone is having a great day. What's the best cash value line of credit (for whole life policies) program you are aware of? While "best" is a relative term, let me clarify -- what's the lowest rate you are aware of?

When I look at the various banks and their programs, I look at these items:
1) Interest rate (usually variable, and tied to WSJ Prime, so it's usually WSJ Prime minus ____ (fill in the blank)
2) Do they offer a fixed interest rate option?
3) What % of the cash value will the bank loan you via the line of credit (usually between 92% and 95%)?
4) Term of the line of credit (usually between 2 years and 5 years, before it renews)?
5) Payment options -- interest only, interest and principal?
6) Do they consider this non-recourse so that the line of credit does not appear on the borrower's credit report?

It should be an interesting exercise next time around for clients as the interest rate has gone up from 2.75% and 3% to now in the high 5's and low to mid 6's. Yes, and as many of you are already thinking -- compare that to the borrow rates on policy loans. Those could be 8, down to 6; maybe 7 down to 5; or even 6 down to 4, depending on the age of the insured, age of the policy, etc. Yes, direct recognition vs. non-direct will absolutely play into this too.

All that aside -- what's the best, most favorable program out there that you are aware of? Thank you in advance!

 

[PrivClientSG]

Just to give this a head start -- here's a list off the top of my head, of banks that offer cash value line of credit programs:

US Bank
M&M Bank
Coastal States Bank
Investors Bank
Fidelity Bank
Bancorp
Columbia (Savings) Bank
Citizens National
Valley Bank
Ameris Bank

 

[Allen Trent]

Just to give this a head start -- here's a list off the top of my head, of banks that offer cash value line of credit programs:

US Bank
M&M Bank
Coastal States Bank
Investors Bank
Fidelity Bank
Bancorp
Columbia (Savings) Bank
Citizens National
Valley Bank
Ameris Bank

I hear Silicon Valley Bank is good

 

[PrivClientSG]

I hear Silicon Valley Bank is good

Go ahead and call. Look into it and report back to us! LOL.

 

[ejbarraza]

Just to give this a head start -- here's a list off the top of my head, of banks that offer cash value line of credit programs:

US Bank
M&M Bank
Coastal States Bank
Investors Bank
Fidelity Bank
Bancorp
Columbia (Savings) Bank
Citizens National
Valley Bank
Ameris Bank

I created a PDF with all of the CVLOCs that I could find:


I was not aware that US Bank was willing to lend on whole life policies. Is it a secured business line of credit? Do you need to go in-branch? A new Fintech Inclined has begun to do this specialized lending, but they currently only allow Northwestern and MassMutual policies. Soon they are supposed to onboard Guardian, PennMutual, and possibly Ameritas.
[EXTERNAL LINK] - Inclined - The Inclined Line of Credit


M&M bank is willing to lend 95% loan to value on Ameritas IULs and 75% on PennMutual IULs. The Bancorp Bank just onboarded IULs from: Transamerica, Nationwide, Pacific Life, Lincoln, Allianz, Symetra, and soon Securian Financial. The Bancorp is still trying to determine a fair APR to charge given the competitive indexed loan rates.

 

[Allen Trent]

I created a PDF with all of the CVLOCs that I could find:


I was not aware that US Bank was willing to lend on whole life policies. Is it a secured business line of credit? Do you need to go in-branch? A new Fintech Inclined has begun to do this specialized lending, but they currently only allow Northwestern and MassMutual policies. Soon they are supposed to onboard Guardian, PennMutual, and possibly Ameritas.
[EXTERNAL LINK] - Inclined - The Inclined Line of Credit


M&M bank is willing to lend 95% loan to value on Ameritas IULs and 75% on PennMutual IULs. The Bancorp Bank just onboarded IULs from: Transamerica, Nationwide, Pacific Life, Lincoln, Allianz, Symetra, and soon Securian Financial. The Bancorp is still trying to determine a fair APR to charge given the competitive indexed loan rates.

Guessing it may not be a popular as it might have been when bank lending rates were so much lower than insurance carrier lending rates. When banks were lending at 2-4%, policy owners that could qualify for bank loan likely could have benefitted compared to being charged the insurance carrier rate. Plus, if their CPA supported, they could likely deducted the bank interest on their tax return, further lowering the net cost of the loan.

With bank rates much higher now, maybe it wont be as appealing

 

[ejbarraza]

Guessing it may not be a popular as it might have been when bank lending rates were so much lower than insurance carrier lending rates. When banks were lending at 2-4%, policy owners that could qualify for bank loan likely could have benefitted compared to being charged the insurance carrier rate. Plus, if their CPA supported, they could likely deducted the bank interest on their tax return, further lowering the net cost of the loan.

Just to give this a head start -- here's a list off the top of my head, of banks that offer cash value line of credit programs:

US Bank
M&M Bank
Coastal States Bank
Investors Bank
Fidelity Bank
Bancorp
Columbia (Savings) Bank
Citizens National
Valley Bank
Ameris Bank

With bank rates much higher now, maybe it wont be as appealing

I suspect the Fed Funds rate will come down to near 0% in the next 12-18 months so I am not hung up on the current APR. Also I am not in the business of selling to others and telling people what to do with their money. I simply do this for me, myself, and I. I do however believe that there is merit in using a bank line of credit in certain scenarios over an indexed loan. For instance, my Ameritas IUL and Pacific Life IUL do not have an indexed loan available until month 25. With M&M bank I can borrow using Ameritas as collateral Month 1 and just refinance into an indexed loan in 2 years. The Bancorp Bank requires a seasoning period of 12 months from the issue date of the policy for Pacific Life. So I can pledge Pacific Life as collateral for a year and then refinance into an indexed loan. I am also interested in the PennMutual Survivorship IUL. The indexed loan requires using a 1 year 9.75% capped index option and the fixed APR is 6%. This is not enough of a loan arbitrage for me, therefore, if I want to use the 66% cap 5 year index option then I would need to go with the bank line of credit.



Even though I would never buy a Transamerica product, many people have and they require you wait 61 months before using the indexed loan option instead of 13 months using the bank line of credit. Minnesota Life has a 4.75% fixed APR, but you have to use their blended index option which consists of 35% Barclays aggregate bond index, 35% S&P 500, 20% Eurostoxx, and 10% Russell 2000. If you want the biggest bang for your buck the 5 year index option is going to require going the bank line of credit route. Also, Pacific Life only allows you to borrow against the 1 year index options which means if you want to use the 2 year and 5 year index options you will need to use the bank line of credit. If you like the convenience of having one online portal where you can withdraw and pay back what you borrow as you see fit by cross-collateralizing multiple IULs and/or whole life policies instead of filing paperwork for multiple policies and having to wait for the check to clear, then this could be a better solution instead of a carrier loan. The APR is also not set in stone, I am working with Greg Phat to offer a competitive rate on IUL lines of credit.

 

[KUtiss]

Hello do any of you know anyone at M & M bank? I've been unable to pinpoint their home office. My biz associate will be looking to issue the IUL from Ameritas.

 

[Lloyds of Lubbock]

Are you looking for a cash value line of credit on an IUL.
They are few and far between.
The cash value based loans business is dead in the water right now.
Agent are taking 3rd party loans and giving them back to the carriers.

 

[scagnt83]

Inclined has started accepting Guardian policies