Fixed loan rates are much easier to understand as the term “fixed” means just that – the rate is fixed and will not adjust. With that said, it is beneficial to be aware of what features exist with policies that carry a fixed loan rate.
Most companies/policies that have a fixed loan rate usually have a rate of 6%. Some insurance companies still carry an 8% loan rate, but this is diminishing as a result of the economy’s prolonged low-interest-rate environment. Here are some common questions and features to be aware of that exist with fixed loan interest rate policies:
An example of this is Guardian Life Insurance Company:
Most companies that use a fixed loan rate on their policies have a 6% interest rate. Several years ago (prior to 2016) it was common to see a fixed rate of 8%. If a fixed loan rate adjustment occurs, they will assess the rate of all policies issued from that point forward. A policyholder that has a fixed rate in place from an established policy cannot experience a rate increase. However, the company will offer the option to existing policyholders to make the change, if they elect to do so.
For example:
Just like the article: “All About The Variable Loan Rate”, this has a lot of detail. It is always important to look at the specific insurance contract and company we are considering. This allows us to review the actual terms of our policy. This article is meant to provide more information and education.