What are adjustable rates for life policy loans in Florida based on?

In Florida, adjustable rates for life policy loans are based on the Moody's corporate bond index. This index serves as a benchmark for determining the interest rates applied to loans against life insurance policies. Life insurance companies often use this index because it reflects the performance of corporate bonds, which provides a more stable and predictable measure compared to the more volatile options such as consumer price indices or savings account rates.

Utilizing the Moody's corporate bond index allows for adjustments that are aligned with broader economic conditions, making it a suitable choice for managing the interest rates associated with policy loans. This approach ensures that policyholders are charged rates that are consistent with market trends, which can fluctuate based on changes in corporate debt and investment opportunities. Thus, basing the rates on this index reflects a standard industry practice intended to create balance and fairness for both the insurer and the insured.