Protect + Preserve
Premium Financing
For M+ clients, protection planning presents
specific obstacles + demands innovation.
Why Premium Financing
Life Insurance?
Ultra-affluent clients often have specialized requirements for their financial planning, including a need for significant amounts of life insurance to account for future estate taxes. However, covering expensive policy premiums can divert cash from growth opportunities.
Premium Financing offers a potential solution. Our team can help you build, implement, and manage a customized system of asset allocation, estate planning, banking relationships, and trust management, allowing appreciable assets to remain invested.
Legacy planning + long-term income strategy.
Our ideal clients are familiar with the wealth-creating power of leverage. By using existing assets to borrow from a trusted lender, individuals and families are able to access significant benefits, including: Estate Preservation, Tax Efficiency, Retained Capital, and Flexibility.
Estate Preservation
Address common needs and priorities, including:
Assisting with the transfer of wealth from one generation to the next with a lower cash outlay, maintaining estate liquidity to pay taxes, settle debts and fulfill bequests upon death, and replacing wealth that might be lost to estate and gift taxes when used in conjunction with appropriate irrevocable trust planning.
Tax Efficiency
By paying interest instead of premiums, and structuring ownership of the life insurance properly, our clients can minimize their gift and estate taxes. Premium financing can help them use more of their annual gifting exclusions rather than tapping prematurely into lifetime exemptions. And, if structured properly, life insurance proceeds can be tax-free, maximizing the after-tax returns for the estate/beneficiaries.
Retained Capital
Many ultra-affluent clients earn double-digit returns on their wealth, be it in their business, real estate or the stock market. Instead of redirecting assets to pay for large life insurance premiums, premium finance allows them to retain more of that capital and keep it working in high returning asset classes.
Flexibility
For founders, entrepreneurs, and ultra-affluent families, flexibility is essential in solving complex estate and business challenges. It means preserving cash flow, scaling strategies to evolving needs, and extending solutions across generations. Just as important is the ability to select among exit options, ensuring long-term efficiency and control.
Understand the risks + what we can do to mitigate them.
Interest Rates
When interest rates are floating, the costs can go up in a rising rate environment.
By acquiring rate caps, swaps or entering into a fixed rate arrangement, we can help mitigate these risks.
Policy Performance
In a permanent whole life contract, performance is driven by dividends.
While dividends are not guaranteed, by using a major carrier with a strong track record and balance sheet, we strive mitigate much of this risk.
Collateral Risk
When posting cash, we risk erosion of the purchasing power of the cash to inflation. When posting securities, there is the risk of market volatility, potentially leading to a margin call.
Careful design and management of a sinking fund should be implemented and is at the core of every design.
Exit Strategy
Whether using windfalls from a business exit or policy cash values, the performance of each may drive when to repay the bank loan. Given the formula for wealth involves time, capital, and a rate of return, shortfall in any one area may require an increase in another.
Typically an exit between 10–18 years from inception is a good conservative benchmark.