Premium Financing

Life Insurance Premium Financing

Premium Financing furnishes an individual with an opportunity to bequeath millions of dollars to loved ones with minimal risk and no money down.

Our program runs on a simple concept. A person takes out an expensive life insurance policy with millions of dollars as a death benefit. Our lenders (funding companies) pay all the premiums to the insurance company.

When the insured passes away, the loan and accumulated interest is deducted from the death benefit. The remaining amount of the death benefit, which is normally a significant amount of money, is then passed on to the insured's family/beneficiary. Everyone gains using this arrangement.

The benefits of a high face value life insurance policy are obvious to all.

However, paying the expensive premiums would often require the selling of properties or liquidating stock holdings. Using our premium financing program you can retain all your money and investments and receive life insurance protection as well.

Besides the obvious benefit of providing funding to family members or a charitable organization, one should also be aware of the estate planning values of the program. A life insurance death benefit is one of the few possessions of the deceased that is not taxed by the government. Passing a large amount of tax free money to your inheritors is one of the most strategic estate planning moves that can be made. Use of an Irrevocable Life Insurance Trust (ILIT) keeps the death benefit out of the estate while still letting the insured name their beneficiaries.

Signing up for the program involves a very minimal risk. Extra costs would only be incurred if a person were to live long enough for the interest to become larger then the death benefit. This, however, is rare since it takes years to reach this point. In addition, exit strategies are available, allowing the insured to terminate the program with no payment and which is well in advance of any cash outlay on the insured’s part.

At times, an insured will no longer have the necessity for life insurance. For example, if he out lives his beneficiaries. We therefore offer exit strategies allowing the insured to end his policy with no payments incurred. Firstly the insured is given the option to forfeit his policy to the lender at any given time. Forfeiting the policy serves as a replacement for payment and the insured can then walk away from the program with no expense. The lender will continue to finance the premiums of the policy so it can recover its money when the policy matures.

Businesses can also benefit from this innovative program. Using our unique product "The Succession Plan", businesses can purchase key person insurance, fund buy/sell plans and SERPS at no cost to those who qualify. Every business now has the ability to achieve financial security.

To sign up for our Life Insurance Premium Financing Program a person will have to be 70 years or older and have a net worth of at least $5,000,000. In addition the insured must be in general good health, although there are occasions for flexibility.

Qualifications

Minimum age: 70
Maximum age: 85
Minimum Insurable Net Worth: $5 million
Insurable Net Worth normally refers to the maximum allowable amount of life insurance for which an individual is eligible at any point in time. The accepted standard in the life insurance industry is that an individual over the age of 65 is eligible for life insurance in an amount equal to his or her net worth minus any current insurance in force. You must be approved “standard” by a life provider but some impaired health risk are generally acceptable in many cases.

What are the risks to the Insured?

Through the ILIT (Irrevocable Life Insurance Trust), the monetary risks to the Insured are virtually non-existent. Since the investor is funding the Trust under a collateral specific loan secured solely by the life insurance policy owned by the Trust, the Insured has no financial liability on the loan.

There is always the possibility that the policy owned by the Trust will not be marketable for a profit at the end of two years for an amount that exceeds the loan balance. If this occurs, the Insured has no financial liability on the loan. Although the Insured, their estate, or their preferred charity would not receive any proceeds from the program in such a situation, they would not have any liability for the loss of the outstanding loan balance.

While there is no direct financial risk to the Insured, depending on the facts of his or her specific situation, it may substantially limit his or her ability to later obtain additional new life insurance. Remember, an individual’s insurability is limited to his or her total asset value.

The Process

The proposed insured fills out a four-page informal inquiry, providing health, lifestyle & financial information to reasonably evaluate him or her as a candidate for this unique program. Within approximately three weeks, a preliminary determination as to the applicant's qualifications will be determined. The utmost care is taken throughout the determination process to maintain the confidentiality of the client and their records through the American Health Insurance Portability and Accountability Act of 1996 (HIPAA).