Policy Loan vs HELOC and Other Loans: 2026 Rates Compared
Written and reviewed by Hans Goldstein, licensed insurance producer, NPN 20602398 · CA Insurance License #4273294Last reviewed · Published October 3, 2026
Goldstein Take: borrowing about $100,000 in fall 2026
Goldstein Take · Hans's editorial verdict · reviewed Oct 3, 2026 · how we grade →
| Option | Verdict | One-line take |
|---|---|---|
| Credit card | F | 22.15% on accounts assessed interest (Fed G.19, Q2 2026). |
| 24-month personal loan | D | 11.86% at commercial banks (Fed G.19, Q2 2026). |
| Brokerage margin (Fidelity, $100k) | C | 10.575%; can be called if the market falls. |
| HELOC (national average) | B | 7.29%, range 3.99% to 11.60% (Bankrate, 9/30/2026); secured by your home. |
| IUL / UL policy loan | B+ | About 2% to 5.5% published; no credit check, no required repayment; can trigger a taxable lapse if ignored. |
| Brokerage margin (Interactive Brokers Pro) | B+ | 5.38% under $100,000 (10/3/2026); cheaper than some policy loans. |
Bottom line: a policy loan is a strong option if you have cash value and a plan to manage the loan. It is not free money, and it is not always the cheapest money.
Educational, not tax advice. Grades answer only the question in the title, for a typical case; your facts can change the answer.
AI voices. Education, not tax or legal advice. Hans is paid a commission if you buy a policy through him. Comment REVIEW on the video for the checklist.
The 2026 rate table
What it costs to borrow about $100,000, fall 2026
| Borrowing source | Rate | As of | Source |
|---|---|---|---|
| Credit card (accounts assessed interest) | 22.15% | Q2 2026 | Fed G.19 |
| 24-month personal loan | 11.86% | Q2 2026 | Fed G.19 |
| Fidelity margin, $100,000 to $249,999 | 10.575% | 9/18/2026 | Fidelity |
| HELOC national average | 7.29% | 9/30/2026 | Bankrate |
| Bank prime rate | 7.00% | 10/1/2026 | FRED |
| Moody's Baa corporate bond yield (market comparison) | 6.47% | Sep 2026 | FRED |
| Moody's composite (policy loan cap input) | 6.25% | Sep 2026 | NAIC |
| Interactive Brokers Pro margin, under $100,000 | 5.38% | 10/3/2026 | IBKR |
| Policy loans (published examples) | about 2% to 5.5% charged; fixed loans on several IULs net to 0% after year 10 | 2025 to 2026 | IUL loan rates |
Policy loan examples: Lincoln and Securian fixed loans charged 4%, Nationwide declared loan 3.90% then 3.00%, John Hancock fixed index loan 5.50%, Allianz indexed loan 5%. Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change.
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Why policy loans can be cheaper
A policy loan needs no credit check or approval because the cash value is the collateral; unpaid interest is added to the loan, and the loan reduces the death benefit until repaid (Northwestern Mutual explainer). State law also caps what an insurer may charge. Under the NAIC model law most states follow in some form, a policy may set a fixed maximum loan rate of no more than 8%, or an adjustable maximum tied to Moody's Monthly Average Corporates (6.25% in September 2026) or the policy's guaranteed rate plus 1%, whichever is higher (NAIC Model 590). Bond yields are a fair market comparison, but the legal cap index is the composite, not Baa.
The three traps
- Interest compounds inside the policy. If you do not pay the interest, it is borrowed too. A $100,000 loan at 5% becomes about $163,000 in 10 years if nothing is paid.
- A lapse with a loan is a tax bill. If the loan outgrows the cash value and the policy lapses, the loan is treated as paid with policy money, and any amount above your basis is taxable income. Lapse with a loan: the tax bomb.
- Index loans can cost more than they look. On an indexed or participating loan, a 0% index year means you pay the full loan rate and earn nothing on the borrowed value. Illustrations may assume at most a 0.5% positive spread (AG 49-A).
Policy loans and withdrawals up to your basis are generally not taxed if the policy is not a modified endowment contract (IRC §7702A) and stays in force; a lapse or surrender with a loan outstanding can create taxable income.
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Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer
Frequently asked questions
Sources
- Fed G.19: credit card interest rate on accounts assessed interest, commercial banks, 2026 Q2 (as of 2026-09-08)
- Bankrate national average HELOC rate (as of 2026-09-30)
- Fidelity margin rate: base rate 10.825% effective Sep 18, 2026; $100,000 to $249,999 debit balance 10.575%; $50,000 to $99,999 10.625% (as of 2026-09-18)
- Interactive Brokers IBKR Pro USD margin: 5.380% (BM + 1.5%) up to $100,000; 4.880% (BM + 1%) $100,000 to $1M; IBKR Lite 6.380%. Benchmark implied 3.88% (as of 2026-10-03)
- Bank prime loan rate (FRED DPRIME, from Fed H.15) (as of 2026-10-01)
- NAIC Model Policy Loan Interest Rate Bill (Model 590): policy may set a fixed maximum loan rate of not more than 8%, or an adjustable maximum that may not exceed the higher of (1) Moody's Corporate Bond Yield Average, Monthly Average Corporates, for the calendar month ending two months before the rate is set, or (2) the rate used to compute cash surrender values plus 1%. Rate reset at least every 12 months, not more than once per 3 months; must raise only if change is 0.5% or more and must lower when the drop is 0.5% or more (as of 2000-04)
- Policy loans need no credit check or approval because the policy's cash value is the collateral; unpaid interest is added to the loan, the loan reduces the death benefit, and if the loan grows past the cash value the policy lapses and the insurer uses the proceeds to pay off the loan (as of 2026-06-26)
- FRED: Moody's Seasoned Baa Corporate Bond Yield
- NAIC: Moody's corporate bond yield averages (policy loan benchmark)
- NAIC Actuarial Guideline 49-A (IUL illustrations)
Hans Goldstein, CA Insurance License #4273294 · NPN 20602398 · Goldstein & Co. LLC dba Goldstein Insurance Services, CA License #6016830
Contact: hans@hansgoldstein.com · 213-414-2808
General education, not tax or legal advice. Tax treatment depends on your facts and on current law, which can change. Talk to your CPA or estate attorney. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Guarantees apply only to the contractual terms of the policy. Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change. Hans is paid a commission by the insurer if you buy a policy through him. For life insurance, ask and he will tell you what he earns on your specific policy. Product and company names are trademarks of their owners. Goldstein Insurance Services is an independent agency, not affiliated with or endorsed by any insurer named here. Life insurance requires underwriting; not everyone qualifies. This page describes products in general terms; read the policy and the insurer's disclosures before you buy.