Securities-based Lines of Credit
SBLOC Lending
SBLOC’s offer unique and efficient way for individuals to leverage their investment portfolios to access liquidity while continuing to retain ownership of their portfolio.
Securities-based Lines of Credit
SBLOC Lending
SBLOC’s offer unique and efficient way for individuals to leverage their investment portfolios to access liquidity while continuing to retain ownership of their portfolio.
SBLOC lending approach presents several compelling benefits:
- Quick approval times- days not weeks
- Generally requires very minimal paperwork
- Underlying portfolio value determines the lendable value and not the client’s credit score
- Interest rates are very favorable especially compared to unsecured lending
- Terms are generally flexible, allowing the lines to be in place for many years and often without any annual renewals
- Proceeds can be used for just about anything (other than purchasing more marketable securities)
SBLOC lending approach presents several compelling benefits:
- Quick approval times- days not weeks
- Generally requires very minimal paperwork
- Underlying portfolio value determines the lendable value and not the client’s credit score
- Interest rates are very favorable especially compared to unsecured lending
- Terms are generally flexible, allowing the lines to be in place for many years and often without any annual renewals
- Proceeds can be used for just about anything (other than purchasing more marketable securities)
From the advisor’s perspective, SBLOC’s can be a valuable tool in your client management toolbox. By providing a client with a means of accessing liquidity you help them to remain invested and can maintain your investment strategy. This has several benefits:
- Advisor can help the client maximize returns by not having to sell at an inconvenient time, thus delaying capital gains and preserving wealth
- By connecting the SBLOC and the investment portfolio, advisor can better advise the client and monitor their overall financial health.
- Can consolidate clients’ assets to generate a larger line (often with lower pricing).
- During times of market volatility, a client can still access liquidity via the SBLOC and have peace of mind by not having to try and time the market.
Some of the most common uses of proceeds are:
- Bridging a home purchase before having to sell your existing home
- Paying for education expenses
- Taxes
- Starting or growing a business
- Debt consolidation
- Luxury purchases (boats, planes, cars, vacation homes)
Some of the most common uses of proceeds are:
- Bridging a home purchase before having to sell your existing home
- Paying for education expenses
- Taxes
- Starting or growing a business
- Debt consolidation
- Luxury purchases (boats, planes, cars, vacation homes)
Conversation starters with clients/ questions to ask:
- What is your back-up plan to deal with unexpected expenses?
- What is your current estimated tax liability?
- If an opportunity arose that you couldn’t pass up, are you prepared to capitalize on it?
- What are your children’s education needs going to be in the next few years?
- Are you planning on any major purchases this year or next?
- Do you have any capex needs for your business?
Conversation starters with clients/ questions to ask:
- What is your back-up plan to deal with unexpected expenses?
- What is your current estimated tax liability?
- If an opportunity arose that you couldn’t pass up, are you prepared to capitalize on it?
- What are your children’s education needs going to be in the next few years?
- Are you planning on any major purchases this year or next?
- Do you have any capex needs for your business?
Insurance Based Line of Credit
IBLOC Lending
Insurance-based lines of credit or IBLOC’s offer a unique avenue for individuals and businesses to access funds using life insurance policies as collateral.
Insurance Based Line of Credit
IBLOC Lending
Insurance-based lines of credit or IBLOC’s offer a unique avenue for individuals and businesses to access funds using life insurance policies as collateral.
Insurance based lone of credit: These lines of credit leverage the cash value accumulated within permanent life insurance policies, providing a source of liquidity without surrendering the policy itself. Unlike traditional loans, where creditworthiness and income verification are primary considerations, IBLOC’s rely primarily on the value of the insurance policy, making them accessible to a broader range of borrowers. Borrowers can use the funds for various purposes, such as funding business expansion, covering personal expenses, or supplementing retirement income. Moreover, the interest rates on these lines of credit tend to be competitive, often lower than those of unsecured loans or credit cards. Additionally, because the loan is secured by the cash value of the life insurance policy, borrowers may have more favorable terms and repayment options.
IBLOC’s can be tax efficient as the borrowed funds are typically not considered taxable income, and borrowers may have the flexibility to repay the loan without triggering additional tax liabilities.
However, it’s essential for borrowers to fully understand the terms and conditions of insurance-based lines of credit, including any potential risks or drawbacks. For instance, failure to repay the loan could result in the depletion of the cash value of the insurance policy or even the loss of coverage altogether. Additionally, borrowers should carefully consider the impact of borrowing against their life insurance policy on their long-term financial goals and estate planning strategies. Despite these considerations, insurance-based lines of credit can be a valuable tool for accessing capital while leveraging the assets within a life insurance policy.
Conversation starters:
- What type of life insurance policy do you currently hold? (e.g., whole life, universal life, variable life)
- How long have you owned the policy, and what is the current cash value?
- Can you provide details on the policy’s premium payments, including the amount and frequency of payments made?
- Have there been any loans or withdrawals taken against the policy in the past, and if so, how have they impacted the cash value?
- Is the policy in good standing, with no outstanding loans or lapses in coverage?
- What is the current death benefit of the policy, and how does it compare to the cash value?
- Are there any riders or additional features attached to the policy that may affect its eligibility for a line of credit?
- Can you provide documentation or policy statements that outline the terms and conditions of the insurance policy?
- Have you consulted with your insurance provider or financial advisor to determine the potential implications of borrowing against the policy?
- What are your goals for accessing a line of credit using your insurance policy as collateral, and how does this align with your overall financial strategy?
Conversation starters:
- What type of life insurance policy do you currently hold? (e.g., whole life, universal life, variable life)
- How long have you owned the policy, and what is the current cash value?
- Can you provide details on the policy’s premium payments, including the amount and frequency of payments made?
- Have there been any loans or withdrawals taken against the policy in the past, and if so, how have they impacted the cash value?
- Is the policy in good standing, with no outstanding loans or lapses in coverage?
- What is the current death benefit of the policy, and how does it compare to the cash value?
- Are there any riders or additional features attached to the policy that may affect its eligibility for a line of credit?
- Can you provide documentation or policy statements that outline the terms and conditions of the insurance policy?
- Have you consulted with your insurance provider or financial advisor to determine the potential implications of borrowing against the policy?
- What are your goals for accessing a line of credit using your insurance policy as collateral, and how does this align with your overall financial strategy?