Equitable® currently has established relationships with Manulife Bank, Scotia Wealth, Gracie Point and Equitable Bank to offer collateral loans to our participating whole life policyholders.
Equitable policyholders have collaterally assigned life insurance policies with all of these lending institutions in Canada.1
How Does it Work?
Equitable participating whole life policyholders may be able to use the cash surrender value of their life insurance policy as collateral for a tax-free bank loan.
- Collateral loans can be arranged by the policyowner with the banks noted above or a financial institution of their choosing.
- The terms of the agreement are at the discretion of the lending institution and include:
- Borrowing limit - can range from 50% to 100% of total cash surrender value.
- Type of loan - variable rate term loan, personal line of credit, etc.
- Payment options - interest only or blend of principal plus interest.
- Amortization period.
- Interest rate.
- Policy is assigned to the lender as collateral for the loan.
- At death, any outstanding loan plus interest is deducted from the death benefit paid to the beneficiaries.
What is the Benefit of Collateral Lending?
- Tax-free access to a larger amount of cash than may be accessible through a withdrawal or policy loan.
- Policy values continue to grow on a tax-advantaged basis.
- Ideal solution for:
What is the Process?
|Step 1||-||Request an updated inforce illustration for your client's life insurance policy to determine if there is sufficient cash surrender value to request a loan. Please note that if there is a disclaimer for the client to sign, this must be completed before the policy can be assigned.|
|Step 2||-||Contact the lender to arrange to have a lending specialist contact your client.|
|Step 3||-||The lender will contact your client to begin the lending process. They review the possible loan options with your client and help them determine the best lending option for their situation. They will adjudicate the loan, and once approved, will meet with your client to complete the loan paperwork. Throughout the process, you are provided with updates on the loan status and funding.|
What Information Will Your Client Need to Provide?The lending institution will likely ask your client to provide information including:
- A completed Personal Financial Statement to determine their net worth.
- An electronic copy or printout of their Equitable Life insurance policy. (The original policy is required in Quebec).
- An updated inforce illustration. Contact Customer Service at 1.800.668.4095 or email firstname.lastname@example.org
- A letter of direction with instructions for the funds once the loan is approved.
- Equitable Bank - email email@example.com, Lending Website Link: https://www.equitablebank.ca/lines-of-credit/csv, Equitable Bank Lending Arrangement
- Gracie Point – all new requests should go to firstname.lastname@example.org or email@example.com
- Manulife Bank Specialized Lending - Contact list of Specialized Lending Team
- Scotia Wealth – all new lending requests should go to firstname.lastname@example.org
- BMO Wealth Management – email@example.com (GTA Region), firstname.lastname@example.org (Ontario Region and Atlantic Region), email@example.com (Quebec Region), firstname.lastname@example.org (Prairies Region), email@example.com (British Columbia Region).
1 Equitable Bank, Manulife Bank of Canada, Scotia Wealth (Scotia Private Banking Insurance Lending and Gracie Point have designated Equitable Life as an approved carrier for the assignment of Equitable Life policies as collateral security for their customers’ loans. The approval of any loans from a financial institution are subject to the lender’s discretion and can be discontinued at any time without notice. The collateral security required from a financial institution will vary depending on their requirements and the circumstances of their customer.