Loans Against Cash Value

[DWPCL]

So how about sharing which WL GUARANTEES a NET Loan of less than 1%?....

Penn Mutual...... After 10 years

 

[scagnt83]

Penn Mutual...... After 10 years

I didnt realize that Penn offered that. Nice feature.

Of course that doesnt help the OP.

 

[YourFamilyBank]

Your statement is a bit misleading. The 4% is guaranteed so that the cash value endows. Its not the IRR earned by the policy holder.

Sorry if misleading.

We aren't talking about IRR - the IRR has nothing to do with the loan crediting or the dividend crediting rate on a loan if Direct Recog company.

Totally separate thing.

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No one is guaranteeing 4% dividends in any whole life life insurance contract in fact dividends are not guaranteed at all.

Over the life of a whole life policy if you pay all premiums to age 100 then at age 100 you may have a guaranteed cash value equal to about a 4% return but dividends are a completely other story. Also many companies today have also implemented a direct recognition concept whereas a loan policy will get less dividends than a policy without loans. Most whole life companies also charge more than 4% for policy loans as well. As stated earlier an IUL with the right company can have either a variable loan that can take advantage of the arbitrage for the difference between what the index earns and what the loan cost is or can have guaranteed fixed loans that cost 1.5% in years one through 5 and 0% after that. The most flexible IUL company when it comes to loans allows you to change monthly from a fixed to a variable or vice versa with out paying the loan off.

Nobody here said anything about guaranteed dividends. Everyone knows dividends aren't guaranteed. We are talking about the guaranteed interest rate. Not IRR either.

We were talking about loan crediting, not IRR over life of policy. Again, this is a totally separate topic. Some mutuals are higher than 4, some are 4ish, but it also depends on how it is charged and credited once paid back.

I agree with what you have stated re: IUL and I/we use them regularly, but not really for planned borrowing cases.