Our clients are the healthy, wealthy and wise. For estate accumulation and future legacy planning allowing for full benefits, use of cash value in the policy and retaining death benefit for beneficiaries, the profile is: 29-55, good or better health, strong cash flow, and a net worth of 5MM or greater.
For the younger client, the potential for tax deferred accessible monetary growth and living benefits, coupled with death benefit coverage in insurance policies, can be an attractive proposal. Having to write a check to satisfy huge insurance premiums to do so can be an unsettling reality for most. Not anymore – we can finance those premiums! We’re comfortable with the idea of borrowing money at a small interest rate to purchase goods or services so we are able to retain the use of our own money. With premium finance, we are able to do just the same AND repay the loan through the cash build up within the policy over time OR when we pass on, the lender is repaid from the death benefit and the balance passes to our beneficiaries.
Instead of paying for insurance with a stream of payments over our lifetime, let’s look at how financing may be an attractive alternative. We will leverage a loan from a bank (at a low interest rate) and put as much money in your whole life or indexed insurance policy (typically for 5 or 7 years) as possible to let that money grow. Instead of the client servicing the premium, the client will service only the interest on the loan! Depending on how much interest is paid, market climate, and policy performance, we can estimate on average that between 10-15 years there will be sufficient growth in the insurance structure to repay the loan from the cash in the policy. Now the lender is repaid and you have a fully funded policy to last for your entire life!
This concept turns the position of life insurance on its head.