The Unique Advantages of

Structured Premium Financing

Premium Financing has long been a utilized strategy for leveraging the financing of insurance premiums to accomplish long-term goals.

With our uniquely designed solutions through exclusive partnerships with the finest financial institutions in the world, we are now able to provide enhanced Premium Financing strategies that are unparalleled in the industry. Our specialized strategies include solutions for a wider range of high-net worth individuals, businesses and non-profit organizations.

Premium Financing has been available for over 50 years, but was primarily used for the ultra-wealthy as a way to pay estate taxes with no money out-of-pocket.

For example: If the Smith Family has a $100 million Estate, they will pay 40% in Federal Estate Taxes, which results in $40 million due at time of death.

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Million Federal Estate Tax due at death

Premium Financed Life Insurance: How Does It Work?

Premium Financing is a strategy whereby a qualified borrower accesses third-party financing to pay for large life insurance premiums. The insurance companies have constructed specific products for these financed plans to minimize outside collateral needs and maximize returns. This allows individuals and businesses to leverage current assets, maximizing returns via a predetermined cash flow.

Every premium financing strategy is custom-made, with every strategy following a similar path:

  • The process begins by determining insurance coverage needs and financial suitability.
  • A preliminary case design is developed and discussed.
  • Many variations of the design are run until the ideal plan is picked by the client.
  • Formal insurance carrier underwriting and bank financing applications begin.
  • The policy is issued by the insurance carrier. The financing bank requires the owner of the policy be an Irrevocable Life Insurance Trust (ILIT), or an LLC.
  • The client provides collateral to the bank in the years when the loan balance is above the cash value inside the policy (usually 8-12 years if insured is under age 60). The shortfall collateral consists of cash and cash equivalents.
  • When approved the bank wires the premium payment(s) to the life insurance company.
  • Annual reviews should be conducted to evaluate insurance policy performance and ensure successful renewals.
  • Once the policy generates cash value above the loan balance the owner can request tax-free loans based on the excess cash value inside the policy beyond the loan balance.

The Many Potential Benefits
of Structured Premium Financing

Reduces or eliminates the out-of-pocket cost for life insurance.

Retains capital for other growth opportunities.

Looks to increase internal rates of return.

Maximizes potential tax advantages.

Leverages net worth to compound and grow wealth.

With all of these potential benefits, premium financing could be a valuable addition to your business and financial needs. Premium Financing is something truly unique and special for business owners, corporations, non-profit organizations, universities and professionals.