What is Premium Financing?Premium financing employs the use of a life insurance policy or policies in which the costs (premiums) are paid by a financial institution on behalf of the insured or owner of the policy. The payments are loans which are provided by third party finance firms known as a premium financing companies. Typically these firms consist of large, well-capitalized banks and banking networks. In order to qualify for these programs, the insured would need to be considered a high net worth
individual with a minimum of $3,000,000 or more for most programs. The Individual to be insured will sign a premium finance agreement with the premium finance company. The terms of the agreement may range from one year to the end of the life of the policy. Often the insured will need to post some form of temporary collateral until certain policy thresholds are achieved, but the amount of collateral is relativity low in comparison to the death benefit. This strategy is often used to accomplish several goals ranging from estate tax planning, leaving a substantial family legacy, paying off high debt amounts upon death, or providing for charity donations. Some of our programs will enable the insured to make life long charity donations while the insured (donor) is living and create a death benefit endowment upon their passing. This is a unique strategy to our network of firms and is an excellent way to provide large ongoing gifts. Please reference the type of programs listed below for an overview of what can be accomplished utilizing these strategies and the requirements to participate. |
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Is Premium Financing an Option for Me?
Implementing a premium financing program requires qualifications which vary among the strategies. First and foremost, you must show an “insurable need” for high amounts of death benefit payable to someone or an entity connected to you who would suffer a loss without this protection. The amount of loss is often based on the replacement of income (with an applied multiplier) or assets that would be lost upon the passing of the insured. From this point, each strategy will vary as far as the requirements depending on other factors such as net worth, age, the ability to post collateral, the size of one’s estate, the amount of life insurance already in force, and health status. Also, one must be able to prove the net worth via a series of financial documents that are substantiated by a CPA.
As a general rule, if you are business owner and have at least $3,000,000 in net worth, you can utilize our Prestige Strategy which offers the business owner estate planning benefits and potential retirement income. The strategy also provides the ability for a business owner to offer financed life policies to its key employees. Just like the business owner, the key employees can utilize the policy to provide retirement income and a death benefit to their name beneficiaries (family or charity).
If you are a high net worth individual of $10,000,000 or more our Y20 Strategy may be the better option. This strategy can provide a death benefit of $100,000,000 or more in certain cases. We offer two platforms for the employment of this strategy – one focus is on estate planning and building wealth for the transfer to heirs, and the other focus is on charitable donations during the life time of the individual insured and upon the passing of the insured. Just as the Prestige Strategy, one must be able to prove the net worth via a series of financial documents that are substantiated by a CPA.
As a general rule, if you are business owner and have at least $3,000,000 in net worth, you can utilize our Prestige Strategy which offers the business owner estate planning benefits and potential retirement income. The strategy also provides the ability for a business owner to offer financed life policies to its key employees. Just like the business owner, the key employees can utilize the policy to provide retirement income and a death benefit to their name beneficiaries (family or charity).
If you are a high net worth individual of $10,000,000 or more our Y20 Strategy may be the better option. This strategy can provide a death benefit of $100,000,000 or more in certain cases. We offer two platforms for the employment of this strategy – one focus is on estate planning and building wealth for the transfer to heirs, and the other focus is on charitable donations during the life time of the individual insured and upon the passing of the insured. Just as the Prestige Strategy, one must be able to prove the net worth via a series of financial documents that are substantiated by a CPA.
What Makes Us Unique in the Premium Finance Marketplace?
The concept and implementation of premium finance strategies are not new. In fact, they have been utilized for over 50 years for high net worth individuals. There are several very well respected firms in the industry including our premium finance partnering company. However, not all of these firms offer the same level of service nor do they offer the same level or extent of benefits as we do. Here
are a few distinguishing characteristics of our premium finance programs:
are a few distinguishing characteristics of our premium finance programs:
The Prestige Strategy – Business Owners
- A Unique Life Insurance Strategy Combined with Low Cost Bank Loans Which Funds 100% of All Premium Payments
- Loan Interest Accrues Over the Life of the Policy
- No Loan Principle or Interest Payment During Insured’s Lifetime
- 100% Premium Paid = 100% of Client Cash Surrender Value and Guaranteed for the First 7 Years
- Little to No Out-of-Pocket Cost to Employer or Employee
- Death Benefit Grows at the Same Rate as the Cash Value: Starting Higher and Earning More
- Option to Pay First 2 Years of Interest – May Increase Benefits
- Create a Personal Life Long Retirement Income Stream and Add Net Worth with the Proceeds from the Life Insurance Policy
- Create a Life Long Retirement Income Stream for Key Employees as Part of Their Retirement Benefits
- Upon Death the Bank Loan and Interest is Repaid with Proceeds from the Life Insurance Policy & Net Death Benefit is Paid to Named Beneficiaries – TAX FREE
- Employer Selects Participants & Vesting Schedule
The Y20 Strategy – High Net Worth Individuals
- A Unique Life Insurance Strategy Combined with Low Cost Bank Loans Which Funds 100% of Al Premium Payments
- Little to No Out-Of-Pocket Cost
- No Loan Principle or Interest Payment During Insured’s Lifetime
- Loan Interest Accrues Over the Life of the Policy
- 100% Premium Paid = 100% of Client Cash Surrender Value and Guaranteed for the First 7 Years
- Death Benefit Grows at the Same Rate as the Cash Value: Starting Higher and Earning More
- Create a Tax-Free Benefit to Your Estate and/or Your Charity AND an Annual Income Payment to Charity EACH YEAR During Your Lifetime
- Upon Death the Bank Loan and Interest is Repaid with Proceeds from the Life Insurance Policy & Net Death Benefit is Paid to Named Beneficiaries – TAX FREE
- Provides Liquidity to Pay Estate Taxes and Leave a Legacy to Heirs/Charity
For more information on each strategy, click on the link provided below for a more details.
The Prestige Strategy – Business Owners
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The Y20 Strategy – High Net Worth Individuals
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For Non Profits (Colleges / Universities, Hospitals, Religious
Organizations, Foundations, Charities)
Consult the Y20 Strategy Overview document (above) for more information on the platform used to support these strategies. Then select your entity of interest below for specific attributes of a premium finance strategy and how it can be of great benefit to your donors and your organization.
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