The purpose of this article is to discuss a common interest rate arbitrage mistake that newbies make. Both newbie policy owners (and agents!) tend to get excited when they realize that the expected growth rate on the cash value of an index universal life is higher than the policy loan rate. This can lead to some dangerous financial decisions.
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It can be hard to understand how an insurance company can make loans at rates lower than they are earning. This session shows how it's possible.