Preferred Loans

Many universal life programs offer preferred loans. This is a category of loans that has a very low net loan interest rate (often at or near 0%). A low net loan interest rate is extremely important when borrowing against the cash value of a life insurance plan. Often times programs that offer preferred loans charge an interest rate of around 6%. These plans, however credit the clients cash value with the interest that is paid (6%). The result of this is a 0% net interest loan. Preferred loans are often offered in universal life contracts after the consumer has held the contract for a specified time period. Often times a universal life contract that is used for supplemental retirement purposes have a preferred loan provision.