Policy loans — the mid-year 2013 life insurance review

By Steve Savant

Permanent cash value life insurance policies have two sets of rates: current company practice and contractual guarantees. They also have two types of policy loans: fixed and variable. But if that wasn’t enough to learn, they have five differing crediting and debiting methods: zero net cost loans, wash loans, spread loans, direct recognition loans and participating loans.

Many sales people promote the lost decade as proof positive that indexed universal life works during the accumulation phase, but they neglect the distribution phase over the same period which displays massive income losses. Steve and Bobby deliver some sales truth serum to settle the true score of policy loan impact during distributions.