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Equity Funding 
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)
 

A combination of mutual fund shares and insurance.  Under equity funding plans, the investor buys the mutual fund shares.  The shares are then pledged as collateral for a loan whose proceeds are used to defray the cost of the premium on the insurance policy.

Effective September 5, 1972, the Board of Governors of the Federal Reserve System amended its Regulation T (Credit by Brokers and Dealers) with respect to credit for the combined acquisition of mutual fund shares and insurance.  The amendment eliminated the requirement that in order to be eligible for the provisions relating to "special insurance premium funding account," which designation was changed from "special equity funding account," a creditor must be the issuer, or a subsidiary or affiliate of the issuer, of programs that combine the acquisition of mutual fund shares and insurance.  Also the amendment clarified that creditors who arrange credit for the acquisition of mutual fund shares and insurance are permitted to sell mutual fund shares without insurance under the provisions of the section relating to special cash accounts.

See MARGIN, MARGIN ACCOUNT, MARGIN BUYING


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