Policy Stack uses specific terminology rooted in whole life banking practice. Terms are grouped by topic below. Use your browser's search (⌘F / Ctrl+F) to find a specific term quickly.
Policies
Carrier The mutual insurance company that issued and services your whole life policy. In whole life banking, carriers are dividend-paying mutual companies — meaning policyholders participate in the company's divisible surplus through annual dividends.
Cash Surrender Value (CSV) The amount you would receive if you surrendered (cancelled) your policy today. CSV grows over time through guaranteed interest, dividends, and paid-up additions. It serves as collateral for policy loans and is the primary metric tracked in your Policy Stack snapshots.
Death Benefit The amount paid to your named beneficiaries upon the insured person's death. In a blended whole life policy, the death benefit includes the base policy face amount, accumulated paid-up additions, and any term rider. The death benefit grows over time as PUA purchases add coverage.
Dividend A distribution from the carrier's divisible surplus credited annually to participating (dividend-paying) policies. Dividends are not guaranteed but have been paid consistently by major mutual carriers for over a century. Most whole life banking policies elect dividends in the form of paid-up additions.
Face Amount The initial death benefit of the base whole life policy, set at issue. Not to be confused with total death benefit, which includes PUA accumulation and term rider.
Illustration / Spec Page The original document produced by the carrier at policy issue showing the policy's structure, projected values, and premium schedule over time. Also called the "ledger." The spec page is the primary source for entering initial policy data into Policy Stack.
In-Force Date (Issue Date) The date the policy became active. Found on the declarations page of your policy contract and your annual statement.
Insured The person whose life is covered by the policy. May differ from the policy owner — for example, a parent owning a policy on a child, or a business owning a policy on a key employee.
Loan Interest Method How the carrier charges interest on policy loans. Arrears (most common): interest accrues throughout the loan year and is charged at year-end; unpaid interest capitalizes into the loan balance. Advance (less common): interest is deducted from loan proceeds at disbursement.
MEC (Modified Endowment Contract) A classification triggered when cumulative premiums paid exceed IRS-defined limits (the "7-pay test"). MEC status changes the tax treatment of loans and withdrawals, removing the tax-free treatment that makes whole life banking effective. Policy designs for whole life banking are structured to stay below the MEC limit.
Paid-Up Addition (PUA) Additional paid-up insurance purchased with the PUA rider premium or with dividends. Each PUA purchase immediately adds both cash value and death benefit. Because PUAs are themselves paid-up, they generate their own dividends in subsequent years — creating a compounding effect.
Policy Anniversary The annual renewal date of the policy. Premium payments, dividend credits, and annual statements typically align with this date.
Policy Owner The person or entity that owns the policy and controls its provisions — taking loans, changing beneficiaries, electing dividend options. Often the same as the insured but not always.
Premium Split The allocation of your total premium between the base policy and the PUA rider. A common whole life banking design uses a high PUA split (e.g., 60–80% of total premium to PUA) to accelerate early cash value accumulation.
Term Rider A temporary death benefit layered on top of a whole life policy. Term riders increase total death benefit at lower cost per dollar, which helps satisfy the insurance company's corridor requirements while keeping the policy below MEC limits. The term rider typically decreases over time as the PUA-funded permanent death benefit grows.
Premiums and Cash Flow
Annual Base Premium The annualized cost of the base whole life policy, excluding any rider premiums.
Modal Loading An additional charge carriers apply when premiums are paid more frequently than annually. Monthly payments typically carry the highest loading (5–8%). Annual payments avoid loading entirely.
Payment Frequency How often you pay your premium — Annual, Semi-Annual, Quarterly, or Monthly. Annual payments are most common for whole life banking because they avoid modal loading fees.
Policy Loans and Interest
Available Cash Value The portion of cash value available as collateral for a new policy loan. Most carriers will lend up to 90–95% of total cash value. This is distinct from total cash value — it represents your borrowing capacity.
Capitalized Interest Policy loan interest that accrues but is not paid out of pocket. Instead, it is added to the outstanding loan balance at the end of the loan year. Capitalized interest then accrues its own interest in subsequent years, which is why the loan balance can grow over time if loan repayments do not cover the accruing interest.
Direct Recognition A carrier policy where your dividend credit is adjusted based on your outstanding loan balance. If you have a loan, your dividend on that portion of cash value is credited at a different (usually lower) rate. Most major whole life banking carriers use direct recognition.
Non-Direct Recognition A carrier policy where your dividend is the same whether or not you have an outstanding loan. The policy loan does not affect the dividend credit rate. Fewer carriers offer non-direct recognition.
Policy Loan A loan taken against your cash value as collateral. Unlike a bank loan, the carrier does not actually withdraw your cash value — it remains on the carrier's books and continues earning dividends. You receive loan proceeds and agree to pay interest at the carrier's stated rate. There is no credit check and no required repayment schedule.
Loan Rate The interest rate charged by the carrier on outstanding policy loan balances. Typically fixed or based on a published index. Rates vary by carrier, typically ranging from 4–8%.
LTV (Loan-to-Value) The ratio of your outstanding loan balance to your total cash value. At 90%+, most carriers begin approaching their maximum lending limit. Policy Stack shows a factual indicator when LTV approaches carrier limits.
Capital Deployment
Capital Deployment The intentional use of borrowed policy loan capital in an external opportunity — real estate, a business, a private loan, or another investment. A deployment tracks where capital is working outside your banking system, what it earns, and when it returns.
Capital Event Any movement of capital that is recorded in your Banking Ledger — premiums paid, loan disbursements, loan repayments, dividends, income entries, and more.
Deployment Income Cash flow returned to you from a capital deployment — rent, interest payments on a note receivable, business distributions. Recorded in the Banking Ledger, summarized in Banking Rhythm's 90-day strip, and, as passive income, compared against entered monthly expenses in Freedom Path's Wealth focus.
Loan Repayment Returning capital to your banking system by paying down a policy loan balance. Used for both single-loan payoffs and aggregate system-level tracking. There is no required schedule — you control the timing and amount. (Historically called "capital repayment" or "capital restoration" — those terms are retained as search aliases but are no longer the primary label.)
Promissory Note Receivable A note where you are the lender: you deployed capital to a borrower who signed a note agreeing to repay principal plus interest over a defined term. Policy Stack tracks notes receivable in the Deployments section and models the income stream in the Income Stacker.
Spread The difference between a deployment's return rate and your policy loan rate. If your deployment earns 10% and your loan costs 5%, spread is 5%. A positive spread means your deployment earns more than it costs to borrow. Spread is one metric — capital velocity and repayment discipline matter equally.
System Metrics
Banking System Your complete set of whole life policies, policy loans, and capital deployments working together as a single system. The dashboard aggregates all policies and deployments into a unified view of your system position.
In Use (formerly labeled "Capital in Use") The portion of your total cash value currently serving as collateral for outstanding policy loans, shown as both a dollar amount and a percentage. At 0%, none of your CV is borrowed against. At 80%, 80% is backing active loans. Note: "in use" covers any loan purpose — buying an asset, paying for a wedding, refinancing an external consumer obligation. It is not the same as Capital Deployed (which is asset principal only).
Capital Velocity A measure of how many complete deploy-and-restore cycles capital completes in a given period. Higher velocity means capital is cycling through the system more frequently, though velocity must be read alongside spread and repayment discipline for context.
Available CV (also called Net CV) Your total cash value minus your total outstanding loan balances. This is your deployable capacity inside the banking system, and the value the dashboard hero shows. Formula: Total CV − Loan Balance = Available CV.
Net Position (concept name — not a display label) The internal name for the Total Cash Value − Loan Balance calculation. Users see it labeled as Net CV (with Available CV as the subtitle) everywhere in product — dashboard, advisor surfaces, exports, AI responses. "Net Position" survives only in the glossary, internal calculation code, and database field names; it is not used as a user-facing label on consumer or advisor screens. The separately-named Net Worth page is a different metric — it totals your full financial picture including assets and liabilities outside the banking system.
Snapshot A point-in-time record of a policy's cash value, death benefit, and loan balance, entered from a carrier annual statement or portal. Snapshots are the primary data input for your dashboard and analytics.
Uninterrupted Compounding The mechanism by which your cash value continues earning dividends and guaranteed interest even while it serves as collateral for a policy loan. Because the carrier lends against the cash value rather than withdrawing it, the full balance remains on the carrier's books and participates in the dividend scale.
Data and Tracking
Actual A data source label indicating the value was entered by you from a carrier document or portal. The most reliable data source.
Modeled A data source label for illustrative projections. Modeled values carry the disclaimer: Modeled · Illustrative · Not recorded. They are planning tools — not predictions of future performance.
Planned A data source label indicating a future intention you have recorded — a planned deployment, a scheduled loan repayment.
Projected A data source label for system-calculated estimates derived from your actual recorded data.
Data Freshness A measure of how current your snapshot data is. Policies with snapshots older than 30 days are flagged in the dashboard sidebar.