Darin D. Duin, CEP
15808 West Dodge Road, Suite 200
Omaha, NE 68118
Financing a $10M Life Insurance Policy ― Without Sacrificing Savings and Assets
A married couple, both 68 years old, met with their team of advisors, including their estate planning attorney and CPA, and determined they needed a $10,000,000 policy to fulfill their estate planning objectives.
The annual premiums were averaging over $200,000 per year – an expense that would significantly interfere with the couple’s planning objectives. Based on those numbers, if one or both of the insured reached age 84, their total financial commitment would have reached almost $6M.
The team of advisors asked TR Estate Planning to research the best available options for paying for the coverage.
TR Estate Planning partnered with one of our trusted lenders to work out a premium financing structure. With this arrangement, the bank would pay the premiums on the policy, and the couple would pay the bank only the interest on the loan. The loan would be repaid out of the proceeds of the life insurance policy after the couple passed.
By implementing a premium finance structure, our clients out of pocket projected commitment through age 84 was $1.3M ― compared to nearly $6M under the original plan.
The couple obtained the insurance they needed ― without having to liquidate key assets or sacrifice their goals. Working with TR Estate Planning, in partnership with their team of advisors, allowed them to create the plan that was right for them, and save as much as $4.7M in premium payments over the course of the policy.
Arranging for a bank to pay a premium, via a loan, is a complex solution to a challenging problem. We can guide you through an informed decision ― from identifying what level of liquidity would allow you to comfortably manage interest payments to understanding rate risk and, in the event of a rising interest rate environment, how a rate could be potentially locked in.