Glass Buildings

Structured Premium Financing Program.

New! No Collateral  Required Option Now Available!
(Must be able to make 5 annual  premium contributions. See below.)

Premium Financing has been available for over 50 years, but was primarily used for the ultra-wealthy as a way to pay estate taxes with no money out-of-pocket. 

For example: $100 million estate x 40% = $40 million due at death to pay federal estate taxes. (Current Federal Estate Tax exemption not included.)

Today, we call it “Structured Premium Financing”, because we’re able to use the same chassis for paying estate taxes with little to no money out-of-pocket, and use it for other financial needs, such as: Key Person Policies, Buy/Sell Agreements, Debt Reduction, Annual Contributions to non-profit organizations, churches or universities with little to no money out-of-pocket for the donor, Tax-Free Income Replacement, as well as Employee Retention for companies, corporations and universities who want to recruit and retain the BEST people in their industry.

 

Today's Retirement Planning

If you are serious about planning for retirement, you have three major Risks that could destroy everything you have worked to achieve.

  1. Market Risk

  2. Tax Risk - With our country's debt rising to over $27T are you prepared to lose 50-60% of your retirement income to taxes?

  3. Capital Risk - The risk of not having enough available capital, for contributions, in order to achieve your retirement goals.

 

The Old Way

Premium Financed Life Insurance
​How Does it Work?

Premium Financing is a strategy whereby a qualified borrower accesses third-party financing to pay for large life insurance premiums. 

The insurance companies have constructed specific products for these financed plans to minimize outside collateral needs and maximize returns. This allows individuals and businesses to leverage current assets, maximizing returns via a predetermined cash flow.

 

The New Way

The Most Unique & Compelling Aspect of This Strategy Is That the Participant's Contributions Are Leveraged 3:1

This concept is not much different than financing a house. For example, you pay 25% down and the bank finances the balance of the 75% – So likewise, you use a mortgage to leverage the assets you have on hand to buy more house than you could afford on your own.  Money is borrowed to buy more house, or with Premium Financing, more benefits.  With this no-market risk strategy, you are buying a life insurance policy with a larger death benefit, more living benefit protections, and the potential for more cash accumulation without the risk of losses (due to declines in a market index).

 

The Lender Matches You Years 1-5.
The Bank Financing Contributes Years 6-10 providing the majority of the total contribution to the plan, and the life insurance policy itself is the full security for the loan.

 
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Client Testimonial

Hear from: Pat Kunz
CEO, Architecture Firm

 

Premium Financing Strategy

Every premium financing strategy is custom-made for each client, with every strategy following a similar path.

Rates and carriers may vary:

1. The process begins by determining the business owner's life insurance coverage needs and financial suitability.
2. A preliminary case design is developed and discussed.
3. Many variations of the design are run until the ideal plan is picked by the client.
4. Formal life insurance carrier underwriting and bank financing applications begin.
5. The policy is issued by the insurance carrier. 
6. When approved, the bank wires the premium payment(s) to the life insurance company.
7. Annual reviews should be conducted to evaluate insurance policy performance and ensure successful renewals.
8. Once the policy generates cash value above the loan balance the owner can request tax-free loans based on the excess cash value inside the policy beyond the loan balance.

 

Compare Premium Financing to What You Could Afford Using Your Own Money

Premium Financing is not much different than financing a house – you use a mortgage to leverage the assets you have on hand to buy more house than you could afford on your own.  Money is borrowed to buy more house, or with more benefits.  

With our strategy, you are buying a life insurance policy with a larger death benefit, more living benefit protections, and the potential for more cash accumulation without the risk of losses (due to declines in a market index).

As you can see from the chart below, the addition of bank funding gives you the potential to significantly enhance the funds available for benefits.

We achieve this all without the typical risks of borrowing:

  • No Interest Payments

  • No Loan Documents

  • No Credit Checks

  • No Personal Guarantees

 

Why is Premium Financing such a valuable financial tool?

With Structured Premium Financing, the financial advantages are easy to see.

  • Reduces or eliminates the out-of-pocket cost for business owner life insurance.

  • Retains capital for other growth opportunities.

  • Maximizes potential tax advantages.

  • Leverages net worth to compound and grow wealth.

  • Loans are secured, fully collateralized through the life insurance contract.

 

In A Nutshell

An alternative option to paying out of pocket for life insurance. 

Premium Financing is a method to fund premiums to support genuine insurance needs for clients that can effectively use leverage, while capitalizing on the possible advantages and accounting for the inherent risk.

By using leverage, our Premium Financing strategy allows more money to build and protect your future income. Every dollar you or your employer contributes can be increased by up to 3x.

Our strategy is simple. Premiums are jointly funded by bank financing and the participant or employer. The bank financing provides the majority of the total contribution to the plan, and the life insurance policy itself is the full security for the loan.  This strategy is specifically designed so that the participant is not required to go through financial underwriting or sign any loan documents.  As an additional protection, our policy structure is also set up to protect your benefits in the event of employer bankruptcy.

By using bank financing, a premium financing strategy allows you to realize benefits beyond your expectations while keeping contributions within your means.

The Ideal Premium Financing Consumer:

Insurable individual in good health age 18 - 60 years old.

Annual income requirement of $100,000 - $250,000 for each participant

Individuals who are trying to obtain tax advantaged supplemental income or death benefit for estate planning.

Needs to meet/justify minimum death benefits requirement of $1.5 million. Premium will vary based on applicant's age.

Corporate entities with minimum annual revenue of $750,000 for the last two consecutive years.

Able to make 5 Annual Premium contributions.

Liquid Net Worth requirement (125% of the cumulative premium payments in the first 5 years minus the contributions made by the business owner).

Individuals and companies that understand the use of leverage.

 

Most Common Candidates

  • Corporations and Universities who want to retain their best people

  • Doctors and Surgeons

  •  Successful Professionals

  •  Corporate Executives

  • Entrepreneurs

  •  Athletes

  •  Restaurant Owners

  •  Real estate investors

  • Privately held business owners

  •  Multifamily offices

  • Hedge fund owners and managers

  •  Private equity firms

 

Benefits

Individual Benefits

If you are concerned about your retirement and don’t think you are saving enough or you have maxed out your 401K, you will realize how a premium financing strategy is a better and smarter way to fund the retirement you dreamed of.   Premium financing utilizes financing as a way to supplement the funding you have available to buy more of the benefits you need.  The ultimate result is more financial comfort than savings and traditional life insurance alone.

Death Benefit Protection

A permanent life insurance policy with living benefit riders* that can provide benefits in the case of:

Critical Illness (Cancer, Heart Attack, Stroke, etc.)

Critical Injury (Coma, Brain Injury, Paralysis, Burns)

Chronic illness (assistance with daily living, bathing, eating, dressing, transferring, etc.)

Terminal illness (illness where death is expected within 12-24 months. Term varies by state.)

*Net of loan repayment, riders are supplemental benefits that can be added to a life insurance policy and are not suitable unless there is a need for life insurance.

Cash Accumulation**

  • Upside Crediting Potential (Interest Credited Based On Market Index)

  • No Loss of Cash Value, 0% Floor (Due To Declines In An Index)

  • Potential Growth Tax-deferred

  • Potential Tax-free Withdrawal (Access to cash value using Tax-Free policy loans and withdrawals)

*Policy loans and withdrawals reduce the cash value and death benefit and may result in a taxable event if the policy is surrendered or lapses.

The Use of Leverage

Using leverage is a very common practice for most people. We use leverage to finance a home, buy investment property, or buy a business. So it would make sense to use leverage to enhance your benefits.

Think of leverage in the following ways. You purchase items today with the hope that they will appreciate in value. Leverage allows you to enjoy more, sooner, and for a longer period of time. Some examples of this would be:

  • You use leverage to buy a bigger house today.

  • You use leverage to purchase an investment property to rent or flip.

  • You use a loan to expand a business without tying up your cash flow.


The decision to use leverage is driven by the idea that the money you contribute will grow at a higher rate of return than the cost of borrowing.  And, at the very least, you get to enjoy the benefits of these purchases today. With our no personal guarantee needed, premium financing policy, you can use leverage to obtain more benefits today and potential cash accumulation for your retirement future

Company Benefits

Attract and Retain Employees by Offering Better Benefits


Key employees are the lifeblood of your company and it is crucial to be more attractive than your competitors. Benefits are necessary to recruit and retain your best employees, but most companies offer essentially the same benefits as everyone else. How do you offer more and set yourself apart?

Premium financing is a unique strategy that allows you to achieve a competitive advantage by offering the best benefits, provide more protection, and potentially save more for employees’ retirement. Simply put, a Premium Financing Strategy provides you with the extra funding to set yourself apart without having to increase your budget.


More Cost Effective than Traditional Plans

The real reason businesses are not offering additional benefits to their key employees is cost.  A Premium Financing strategy uses leverage to help cover the costs of the additional benefits needed to attract top talent.  A unique feature of premium financing is that there are no loan qualifications or loan documents signed by the employer or employee. The contributions made to the strategy act to fully secure the loan.  Utilizing our premium financing strategy allows companies to spend less on something that would otherwise be a substantial expense.  This will ultimately improve your cash flow and decrease costs while offering the differentiation needed to compete for the best employees.

In addition, due to the high cost of benefits, businesses also find it difficult to provide adequate coverage for other business liabilities such as Key Person, Buy-Sell Agreements, Succession Planning, etc. These events can typically be funded at half the cost of traditional options with Premium Financing.


A Better Way to Fund Contingent Business Liabilities (Key Person, Buy-Sell Agreements, Succession Planning, etc.)


Key executives leave for a variety of reasons which can leave a business scrambling to cover their loss. They can become disabled, develop a chronic illness, retire, pass away, or simply leave. Most companies use their cash to grow their business and not to fund contingent business liabilities. Our Premium Financing helps to provide the funding needed to protect your business in a wider variety of circumstances.


A Better Way to Informally Fund Deferred Compensation


Premium Financing is a superior way to informally fund Non-Qualified Deferred Compensation. By financing a life insurance policy as opposed to traditional investment alternatives, you get the added advantage of additional cash through the use of leverage, potential tax-deferred growth, protection benefits should something happen to the employee all without downside market risk.

Business Applications

The departure or premature loss of a key executive can significantly affect a company’s bottom line. A leveraged life insurance policy helps provide the additional funding required to address the following business situations effectively:

  • Executive Bonuses

  • Buy/Sell

  • Key Man

  • Partner Buyout

  • Succession Planning

  • Highly Compensated Employee Incentives

 

DISCLAIMER

*Receipt of benefits depends on rider and meeting certain qualifications and varies by state. The use of one benefit may reduce or eliminate other policy and rider benefits. Payment of living benefits will reduce the cash value and death benefit. Substantial tax ramifications could result upon contract lapse or surrender.

Surrender charges may reduce the policy’s cash value in early years. It is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage. The Premium Financing Strategy is dependent on the employer making contributions for the first 5 years and not defaulting on the policy, which could result in policy lapse and surrender charges. The employee will not have access to the policy, the cash values, the death benefits or the living benefits until the loan is repaid and the assignment is released. The lender has the right to discontinue funding new premiums, exit the market, or to demand loan repayment based on the terms and conditions signed by the Master Trust. See the Master Trust documents for additional information. Receipt of accelerated benefits may be taxable and may affect eligibility for public assistance programs. This information is not intended as tax advice. Please consult with your tax advisor regarding your own situation. Not all riders are available by all life insurance companies.

 
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