PREMIUM FINANCE
Wealth & Estate Management Solutions
Life Insurance
When structured properly, Life Insurance is an incredibly valuable asset when it comes to estate planning. It not only serves as a highly effective vehicle for financial protection to help increase the wealth that is passed on to the beneficiaries, it also offers the flexibility to make sure the client reaches their personal financial goals, such as their children’s education being accounted for, a retirement fund or anything else money can buy.
From Term Insurance to Indexed Universal Life Insurance, including Premium Finance, we’ll work hand in hand to structure the best product to protect your wealth and financial wishes.
This proactive approach allows our clients, and their future generations, to be “set for life.”
Premium Finance
Premium Finance is a sophisticated financial strategy that allows high net-worth individuals to finance their life insurance premium and facilitate wealth transfer. It has been used in the insurance industry for decades, and when structured properly, it’s been proven to be a practical and valued asset for estate planning.
How It Works
An Irrevocable life Insurance Trust (ILIT) is set up to own the life insurance policy, which means the policy is owned outside of the client’s taxable estate.
The trust then takes out yearly loans from a commercial lender, normally a bank. The premiums for the policy are paid yearly by the bank, and the loan is fully secured at all times with the policy cash value itself as the primary source of collateral. If needed, the client will add additional collateral by way of a cash account or other assets.
The policy is designed to capitalize on the positive arbitrage between the policy crediting rate and the loan interest rate. As the cash value of the policy increases, at a certain point, the loan is repaid by the policy itself. The client only pays annual contributions to cover interest payments on the loans.