Loans Against Cash Value

[scagnt83]

Here are two other options I found... Im in no way endorsing them or even telling you they are reputable... they are financial institutions that claim to do this, thats all I know:

http://partners4prosperity.com/wp-content/uploads/2015/06/Cash-Value-line-of-credit-Fidelity.pdf
(the bank is www.lionbank.com)

https://conestogabank.com/sba/whole-life-lending.htm

 

[Dan68701]

I'll reach out to them tomorrow. Thank you!

 

[Josh]

How is a bank making money away 2.5%?

 

[Dan68701]

Very simply. They borrow money from the fed at .25% and lend it at 2.5%. The spread is their profit. Many banks lend money to their high net worth clients at those rates.

 

[Josh]

Very simply. They borrow money from the fed at .25% and lend it at 2.5%. The spread is their profit. Many banks lend money to their high net worth clients at those rates.

You're talking like eight figure net worth?

 

[Dan68701]

Yes (or 10 figures if you want to include decimal points )

 

[scagnt83]

Yep, the more money you have the better deal you can get when it comes to finance. In investment terms its called "breakpoints". In real life its called leverage.

If you net a 2% profit on a $1000 loan you make $20.
If you net a 2% profit on a $10mm loan you make $200k.

Thats why jumbo CD rates exist, jumbo loans, Premium Banded Rates on Annuities, etc. Its why an investment advisor will charge around 0.25% on a $50mm account but 1% or more on a $100k account.

 

[Dan68701]

I'm not sure I understand what you're recommending. Can I trouble you to elaborate?

 

[DHK]

I wouldn't.

What he's recommending is to get you a NEW policy, funded by the tax-free exchange of cash values from your old policy.

Your new policy would be based on your current age, health status, new constestibility period, and new premium structure (because you're older now).

 

[Dan68701]

Oh... I don't have an existing policy yet. I'm asking my question because I'm buying a new policy now that will be generating substantial amounts of cash value (roughly $700k) from day #1 and I wanted to be able to borrow against that.