The short answer
Whole life policy loan rates reported in August and September 2026 ran from 5.00% (a Guardian fixed rate, as BetterWealth reported it) to 6.75% (Lafayette Life, as BetterWealth reported it), with MassMutual's adjustable loan at 5.77% as of September 2026 per Insurance Geek[4][5]. Variable rates are capped under the NAIC model by the Moody's corporate average, which NAIC published at 6.36% for October 2026[2]. A fixed loan rate can be set as high as 8%[1].
- Moody's average, Oct 2026
- 6.36%
- Fixed rate ceiling, model law
- 8%
- Reported range, Aug to Sep 2026
- 5.00% to 6.75%
On this page
Reported loan rates, with who said it and when
No insurer in this table publishes a consumer page with its current loan rate. The figures below come from agency and trade sites that state a date, and they are labeled with that site's name. A rate on your own policy can differ, because many contracts set it once a year on the policy anniversary.
| Company | Loan rate | Type | Recognition | Stated by |
|---|---|---|---|---|
| Guardian | 5.00% | Fixed, locked for the first ten policy years | Direct [4] | BetterWealth, Aug 25, 2026 [4] |
| Penn Mutual | 5.30% | Adjustable | Direct | Insurance Geek, as of Sep 2026 [5], same figure in BetterWealth [4] |
| MassMutual | 5.53% | Variable | See below | BetterWealth, Aug 25, 2026 [4] |
| MassMutual | 5.77% | Adjustable | Non-direct, per Insurance & Estates [6] | Insurance Geek, as of Sep 2026 [5] |
| MassMutual | 6.00% | Fixed | Direct | Insurance Geek, Sep 23, 2026 [5] |
| Lafayette Life | 6.75% | Not stated by the source | Non-direct [7] | BetterWealth, "at the time of writing", Aug 2026 [4] |
| Northwestern Mutual | n/s | Not stated by the sources | Direct only [5] | Insurance Geek, Sep 23, 2026 |
Checked November 10, 2026. n/s means no source we opened states a rate. Rates are as each named site reported them, not quotes from the insurers. Your contract and your annual statement give the rate that applies to you.
- Reported loan rate, Guardian 5.00%, Penn Mutual 5.30%, MassMutual 5.53%, 5.77% and 6.00%, Lafayette 6.75%
- Moody's Average Corporate, October 2026, 6.36
- 8% fixed rate ceiling in the NAIC model
How a variable loan rate is capped, from the model law
The NAIC Model Policy Loan Interest Rate Bill (April 2000) gives a policy two ways to set its loan rate[1].
- A fixed rate. "A maximum interest rate of not more than eight percent (8%) per annum".
- An adjustable rate with a ceiling. The ceiling is the higher of the Moody's corporate average "for the calendar month ending two (2) months before the date on which the rate is determined", and "the rate used to compute the cash surrender values under the policy during the applicable period plus one percent per annum".
- How often it can move. "At least once every twelve (12) months, but not more frequently than once in any three-month period."
- When it must come down. "Whenever a reduction as determined under Subsection B would decrease that rate by one-half percent (1/2%) or more per annum".
- No lapse from a rate change alone. "No policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year".
The Moody's average, month by month
NAIC publishes the Moody's monthly averages because they are "referenced in the Standard Valuation Law and the Model Policy Loan Interest Rate Bill"[2]. Its page shows only the two latest months, so earlier months here come from an archived copy.
| Month | Moody's Average Corporate | Our reading, earliest rate it can cap | Source |
|---|---|---|---|
| April 2026 | 5.76 | A rate set in July 2026 | Archived NAIC page [3] |
| May 2026 | 5.85 | A rate set in August 2026 | Archived NAIC page [3] |
| June to August 2026 | n/s | Not retrieved | No copy found |
| September 2026 | 6.25 | A rate set in December 2026 | NAIC [2] |
| October 2026 | 6.36 | A rate set in January 2027 | NAIC [2] |
Checked November 10, 2026. The third column is our reading of the model's "calendar month ending two months before" wording. Each policy states its own lag, and an insurer may charge less than the ceiling.
Fixed loan rates and the 8% ceiling
A fixed loan rate never moves, which makes the cost easy to plan. The trade can be a higher starting rate. At MassMutual, Insurance Geek reported 6.00% fixed against 5.77% adjustable in September 2026[5]. Older policies show how high fixed rates once ran. A Northwestern Mutual history sheet notes policies with "a 6% loan rate in 1974" and an 8% loan rate from 1975 to 1981[8]. If you own a policy from that era, its loan rate is printed in the contract and may still be one of those.
Direct vs non-direct recognition
Recognition is how a loan affects the dividend. Under direct recognition, "only the loaned portion of cash value gets a lower dividend interest credit"[5]. Under non-direct recognition, "the policy continues to pay dividends as though no money was borrowed"[9]. Which one costs less depends on the spread between the loan rate and the credit on the loaned part, and both can change. Dividends are not guaranteed under either design.
- Cash value credited at the full dividend rate, not guaranteed
- Loaned part, $40,000 of $100,000
Example. A $40,000 loan on a direct recognition policy, first year, rates as reported for Penn Mutual
- Loan interest at 5.30%
- $2,120
- Dividend interest on the loaned part at 4.65%, not guaranteed
- $1,860
- Net cost of the loan for the year
- $260, a 0.65% spread
Rates from Insurance Geek for policy years 1 to 10, a 5.30% loan charge against 4.65% dividend interest on the loaned portion, September 2026 [5]. BetterWealth reports the same 0.65% spread for policy years 1 to 10 [4]. The dividend credit is not guaranteed, and the spread can change after year 10.
Who uses which, as sources state it. Penn Mutual uses direct recognition[5][10]. Northwestern Mutual is "Direct recognition only"[5], and its history sheet dates direct recognition to 1982[8]. Lafayette Life "practices non-direct recognition"[7]. MassMutual is the split case. Insurance & Estates calls it "non-direct but also has a direct recognition option on certain whole life products"[6], and Insurance Geek lists its fixed loan as direct recognition[5]. Your contract says which applies to your loan.
What any loan does to the policy
A policy loan is not free money from your own account. Kitces calls it "really nothing more than a personal loan from the insurance company to the policyowner"[11]. While it is unpaid, the loan and its interest reduce the death benefit your family receives. If the balance grows to the cash value, the policy lapses, and the IRS treats a lapse "as equivalent to a full surrender", so any gain becomes taxable even though no cash reaches you[12]. That is general information, and a tax professional should review your case. The loan cost calculator shows the year your own loan would reach the cash value. Before borrowing, see how soon a policy has value to lend against and the clause itself on the policy loan provision page. A loan that is still open when you exchange a policy also changes the tax result of a 1035 exchange.
Update log
- November 10, 2026. Page built. Rates from BetterWealth (August 25, 2026) and Insurance Geek (updated September 23, 2026). Moody's averages from the NAIC page and its June 17, 2026 archive copy. June to August 2026 averages could not be retrieved.
Questions people ask
What is a typical whole life loan interest rate?
The rates reported by agency and trade sites in August and September 2026 ran from 5.00% to 6.75%. Your own rate is printed in your contract or on your annual statement, and it may reset once a year.
Can the insurer raise my loan rate at any time?
Under the NAIC model, an adjustable rate is reviewed at least once every 12 months and no more often than once in any three-month period, and it cannot exceed the stated ceiling. A fixed rate stays where the contract sets it. Check your state's rules and your policy.
Do I have to pay the loan interest every year?
Usually no, but unpaid interest is added to the loan and then charges interest itself. That compounding is what eventually ends a policy, as the calculator shows.
Is direct or non-direct recognition better?
Neither in every year. It depends on the spread between the loan rate and the dividend credit on the loaned part, and both can change. Dividends are not guaranteed under either design.
Last updated November 11, 2026. Found an error? Tell us and it goes in the corrections log.
Sources (12)
- NAIC, Model Policy Loan Interest Rate Bill, April 2000. Opened November 10, 2026. content.naic.org
- NAIC, Moody's Corporate Yields, no date shown, months September and October 2026. Opened November 10, 2026. content.naic.org
- Internet Archive copy of NAIC, Moody's Corporate Yields, captured June 17, 2026. Opened November 10, 2026. web.archive.org
- BetterWealth, Whole Life Insurance Policy Loans, August 25, 2026. Opened November 10, 2026. betterwealth.com
- Insurance Geek, Best Infinite Banking Companies, updated September 23, 2026. Opened November 10, 2026. insurancegeek.com
- Insurance & Estates, Direct Recognition vs Non-Direct Recognition, updated August 31, 2026. Opened November 10, 2026. insuranceandestates.com
- Insurance & Estates, Lafayette Life Insurance Company Review, updated February 27, 2026. Opened November 10, 2026. insuranceandestates.com
- Northwestern Mutual, Dividend Interest Rate for Cash Value Policies, form 71-0057 Rev. 10/09, as hosted by a third-party file server. Opened November 10, 2026. admin.emeraldconnect.com
- White Coat Investor, Downsides of Whole Life Insurance, October 29, 2018. Opened November 10, 2026. whitecoatinvestor.com
- The Insurance Pro Blog, Whole Life Insurance Dividend Rates 2026, updated October 31, 2026. Opened November 10, 2026. theinsuranceproblog.com
- Kitces.com, Bank On Yourself Review, March 16, 2016. Opened November 10, 2026. kitces.com
- Kitces.com, 1035 exchanges of permanent life insurance, policy loans and lapse, modified March 11, 2025. Opened November 10, 2026. kitces.com
