Life Cap

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Dictionary Says

Definition of 'Life Cap'

The maximum amount that the interest rate on an adjustable rate loan can increase over the term of the loan. 

A life cap can be expressed as an absolute interest rate - such as a maximum lifetime rate of 12%, which is called an interest rate ceiling - or as a maximum percentage change in the interest rate from the initial interest rate on the loan. When the life cap is expressed as a maximum percentage change from the initial interest rate, it can also apply to interest rate decreases.
Investopedia Says

Investopedia explains 'Life Cap'

The life cap on a loan is used frequently as part of an interest rate cap structure. For example, a fixed period or hybrid ARM frequently has initial, periodic and life caps. On a 5-1 hybrid ARM, this might be expressed as a 5-2-5 cap structure, meaning there is a 5% initial cap, 2% periodic cap and 5% life cap. This means that at the first interest rate change date, the rate could change by a maximum of 5%, and at each subsequent change date the rate could change by a maximum of 2%. The maximum lifetime change in this example is 5%.
Search results for

'Life Cap'

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    ... portion, but cap the maximum return that a policy holder can receive in said account.
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  • Does Spiderman Need Life Insurance? - Investopedia.com

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    ... the need for life insurance should be assessed from a total wealth asset allocation
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    ... And Beta.) Large Cap Reasoning The SPA MarketGrader Large Cap 100 claimed the top
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  • Four Insiders You Can Count On

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