Educating Clients about Accessing Whole Life Cash Value

Traditional Ways to Access Whole Life Cash Value

There are several traditional ways in which a policyowner can access the cash value of their whole life insurance policy. These options allow individuals to tap into their policy's cash value when they need it most, but they may be less than ideal for many reasons, including having the downside of reduced death benefit and/or tax consequences.

1. Partial Surrender (Withdrawals): A policyowner can choose to partially surrender their whole life policy (sometimes referred to as a withdrawal), which involves taking out a portion of the cash value while still maintaining the policy. This option allows individuals to access funds for immediate needs while retaining the remaining cash value for future use. However, once cash value is surrendered, it cannot be put back into the policy. As a result, the policy’s death benefit is often significantly reduced. 

    

2. Policy Loans: Another way to access the cash value is through policy loans. Policyowners can borrow against the cash value of their whole life insurance policy, using it as collateral. These loans typically come with fairly competitive interest rates and flexible repayment terms and are available to the client by speaking with their Financial Advisor, but they may not be available to all policyowners. Policy loans are provided by the carrier of the policy. Most carriers require minimum cash values, and many have other rules which may exclude younger and smaller policies from being able to use this option.

    

3. Dividends: If the whole life insurance policy is participating, policyowners may receive dividends. These dividends can be taken in cash, used to reduce premiums, or reinvested to increase the policy's cash value. Dividends provide an additional source of funds that policyowners can access to meet their financial goals, but they typically aren't very large sums that may be needed to cover bigger expenses.

    

4. Third-Party Bank Loans: A limited number of third-party banks offer lines of credit that can be secured by the cash value of whole life insurance policies. These third-party options have added more options for policyowners, but rates, qualification criteria, flexibility, minimums, customer service, and repayment terms all vary. Financial Advisors who refer their clients to one of these options are risking a bit of the trust they've built with their client since they can't fully control the process the client must go through to open a line of credit. In some cases, clients have reported going through cumbersome application processes and experiencing poor customer service.

Introducing the Inclined Line of Credit (iLOC)

The iLOC is a newer option on the market that offers clients a unique and convenient way to access their cash value whenever they need it. Whether it's for unexpected medical expenses, home renovations, or any other life circumstance that requires a significant financial outlay, the iLOC provides clients with the peace of mind knowing that their money is easily accessible.

What sets the iLOC apart from other forms of borrowing is flexibility, competitive rates, and no  fees. The iLOC is available to many policyowners who don't qualify for other options because our minimum cash value is only $5,000, the lowest in the industry. Unlike traditional loans, the iLOC allows clients to borrow against their cash value without the hassle of lengthy approval processes or financial disclosures.

Applying takes about 15 minutes, and depending on the situation, an iLOC can be fully active in as little as 10 business days. Once active, drawn funds are available overnight. This not only makes it a faster option for clients in need of funds, but it also provides them with a level of financial security that is unmatched by other borrowing methods.

An option like the iLOC offers clients the freedom to use their cash value as they see fit. Whether they choose to invest in a new business venture, pay for their child's education, or simply enjoy a well-deserved vacation, the iLOC puts the power of choice in the hands of the clients. This level of control and flexibility is a major selling point for whole life insurance policies, as it allows clients to truly make the most of their financial resources.

Educated Clients Get More from Whole Life

By educating clients about the benefits of the iLOC, financial advisors can empower them in meaningful ways to leverage their whole life policies as a tool throughout their lives. Clients who are aware of options like the iLOC and its advantages will be more likely to see the value in whole life insurance and the long-term benefits it can provide.

In conclusion, the Inclined line of credit (iLOC) is a game-changer for whole life insurance policyowners and their advisors. Financial advisors who educate clients about the ability to access their cash value throughout their lifetime, how it works, and the options to do so add enormous value to their clients' decision-making process around whole life. With the iLOC, clients have the flexibility, speed, and control they need to navigate life's uncertainties and make the most of their financial resources.