Interest rates on a Cash Value line of credit are pretty high right now. Most of my clients are choosing to use a policy Loan instead (from the company). Policy Loan rates are pretty low right now... but it depends on the company too.
You can try Integrity Bank and Trust in Colorado Springs. Ask for Toby.
Real Estate Agent · Scottsdale, AZ · Member since 2024 · 155 posts · 103 votes
1y
Hey John @John Salcedo, great question. I’ve had a couple of clients in both Austin and Scottsdale who’ve looked into similar options, and the truth is, it’s one of those niche areas where the institution you choose can make a big difference. From what I’ve seen, a lot of the bigger banks like Chase or Wells fargo tend to shy away from offering lines of credit backed by whole life policies. They just don’t see enough of these deals to feel comfortable with them.
That said, I’ve had more luck with smaller regional banks and credit unions.. especially those that cater to higher-net-worth individuals. For example, last year a friend of mine was able to secure a line of credit through a regional bank in Phoenix.. Western Alliance, I think it was. They were familiar with the whole life policy collateral structure and gave him a decent rate. In Austin, I know Horizon Bank has been open to more creative financing strategies too, so it’s worth checking with them.
One thing to keep in mind is that the terms can vary wildly depending on the institution, so I always recommend reaching out to a financial advisor who’s well-versed in life insurance-backed loans before pulling the trigger. It’s one of those situations where the fine print can really bite you if you're not careful.
From what I read in the Wall Street Journal a while back, a lot of these deals tend to come down to relationships.. having a good banker who understands the value of your policy is key. If you’re in an area with a strong private banking community, that might be your best bet.
Hope that helps! Oh.. and one thing I learned the hard way is that some policies have restrictions on borrowing against them, so double-check with your insurance provider first. Wouldn’t want you to get down the road and hit a wall there.
- Jasper / Pat Aboukhaled
Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC
Lender · Nashville TN, USA · Member since 2024 · 142 posts · 30 votes
1y
Hey John,
Great question! Using a whole life policy to secure a line of credit can be a powerful tool, especially since you’re leveraging a guaranteed asset. A few insurance companies or financial institutions with strong relationships in the insurance space often provide this service.
From my research and personal experience, MassMutual and Northwestern Mutual are well-known for offering policy loans or lines of credit against whole life policies. You might also want to explore specialized banks that focus on working with high-net-worth individuals who leverage insurance products like Merrill Lynch Private Banking or Wells Fargo’s Private Banking division. They may have more flexible terms compared to traditional banks.
Just be sure to check the interest rates and repayment terms since borrowing against your policy can reduce the death benefit if not paid back in time. Also, it’s worth confirming if any particular lender requires the policy to have accumulated a certain amount of cash value before offering a line of credit.
Interest rates on a Cash Value line of credit are pretty high right now. Most of my clients are choosing to use a policy Loan instead (from the company). Policy Loan rates are pretty low right now... but it depends on the company too.
You can try Integrity Bank and Trust in Colorado Springs. Ask for Toby.
Any recommendations for institutions that can extend a line of credit backed by a whole life policy?
Thanks
Great question! Good to see people exploring their options for leveraging their cash values. Makes me truly happy to see people who understand some of the 'hidden' benefits of CVLI 👍💪👏
But, agree with @Thomas Rutkowski in that you'll be hard pressed to find CVLOC rates at present that beat policy loan rates. If you find a great rate from a bank below, say 6%, let us know.