Spread

Spread is the difference between the return rate on a capital deployment and the loan rate on the policy loan used to fund it.

Formula: Spread = Deployment Return Rate − Policy Loan Rate

For example, if you deploy capital at a 10% return and your policy loan rate is 5.5%, your spread is 4.5%.

A positive spread means the deployment is earning more than the loan costs. A negative spread means the deployment is earning less than the loan rate — which may still be worthwhile depending on other factors like capital velocity and repayment discipline.

In whole life banking, spread is one metric among several. Capital velocity (how many times money cycles through the system) and repayment discipline can matter as much as spread in determining the long-term health of the banking system.

In Policy Stack, spread is a calculated value shown on each deployment record. It updates automatically when you record new snapshots or update the deployment's return rate.

Related terms: Capital Deployment, Capital Velocity, Policy Loan