Market History Report
Why use an Index Universal Life for Premium Finance rather than a Whole Life Product?
The earnings rate of the underlying life contract needs to have sufficient earnings above the loan rate incurred by the premium finance loans. In the case of Whole life products the company declares the Dividend Rate for the year ahead, while the Index Universal Life products provide policy credits base on index allocation choices.
There has been a generally declining trend in Whole Life dividend payments over the last 30 years. The average 2018 dividend rate is 5.46% on Whole life policies which is not sufficient to provide an ongoing arbitrage between the finance loan rate and the dividend rate.
For further details about IUL crediting see: Market History Report
Historical Dividends of Whole Life Products (1988 - 2017)
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