What You Need to Know
- An IBLOC can give clients access to up to 95% of the cash value of eligible whole life insurance policies.
- Access is subject to credit approval and underwriting.
- An IBLOC can be used for many purposes, including buying real estate.
Americans are now seeing more volatility in the market.
After years of relative stability, there is now a fear of a possible recession.
And as borrowing gets costlier, consumers are left wondering what their best options are.
For that reason and more, financial professionals and insurance agents should consider recommending that clients explore an insurance-backed line of credit (IBLOC) on their whole life insurance policies.
While other loan options might be risky during this uncertain time, an IBLOC is a great option to get stable, fast liquidity with less volatility.
But what do financial professionals and insurance agents need to know in order to best market this option to their clients? This article covers the essentials that financial professionals/agents should know about IBLOC and how it can benefit both themselves and their clients.
What is an IBLOC?
An insurance-backed line of credit can give clients quick access to up to 95% of the cash value of their eligible whole life insurance policy.
Note that access to the line of credit is contingent on life insurance policy remaining in good standing.
At the bank I work for, the insurance policy owner must be the borrower, and the insurance policy must be issued by one of the following approved insurance providers to be eligible as IBLOC collateral: Guardian, MassMutual, Northwestern Mutual, New York Life, John Hancock, Penn Mutual or Ameritas.
This is subject to credit approval and underwriting, and is assuming that the client’s life insurance policy is in good standing.
One of the biggest differentiators of an IBLOC versus other lines of credit is its stability and how resilient it can be from outside forces like dips in the stock market.
Because an IBLOC is not tied to securities, it is more protected from market fluctuations.
An IBLOC cannot be used for the purchase of securities or to pay off a margin loan that was used to purchase securities.
What purposes is it most often used for?
There are many uses and benefits of accessing liquidity with an IBLOC.