What is Premium Finance?
- American Brokerage Services provides premium financing services through its “Best in Class” network of Lenders and exclusive ZS Platform for high net worth individuals and business owners.
- To finance a premium, the individual or company requesting insurance must sign a premium finance agreement with an approved premium finance lender.
- The premium finance lender then pays the insurance premium on behalf of individual or company, usually in annual installments, for the cost of the program.
- Typically, clients that engage in this transaction are age 29 to 80 with net worth of $5MM or greater.
Premium Finance Benefits
There are a number of benefits to financing life insurance premiums, some of which are as follows:
- Eliminates the requirement for large up-front premium payments to an insurance company.
- Premium financing is often transparent to the individual or company insured. Brokers transmit the completed premium finance agreement to the premium finance lender, and the policy holder is billed for loan interest as they would be for any other typical insurance policy.
- Allows for clients to obtain needed coverage without having to liquidate other assets for premium costs. A signature benefit of premium financing is avoiding the high cost of paying premiums with net-after tax-out of pocket dollars.
- By incorporating leverage into ones planning methodology when funding the purchase of their life insurance… clients benefit from the retention of their own capital. In turn this retained capital allows clients to use those funds for other purposes and/or to keep their invested assets invested in instruments and things of their choosing as opposed to sending those net-after tax-out of pocket dollars to an insurance company.
Traditional & SCP Client Profile
- No Minimum age… maximum age of 80.
- Net Worth $5MM or greater for “Traditional” transactions (some exceptions may apply via Carrier Guidelines)
- For Small Case Platform Clients minimum income of $200,000 annually
- For Small Case Platform Clients there is a liquidity requirement determined by premium and face amount
- Business-owners, Entrepreneurs or Professionals desire to retain their capital while maximizing wealth transfer
- Has need to fund an Estate Planning strategy
- Has desire to fund charitable intent
- Desires to fund potential Supplemental retirement income
- Business Owners needing to fund Buy Sell Agreements
- Business Owner needing to fund Key Person Policy
- Business Owner needs to fund Executive Compensation Plans
Our Primary Lender Partner Offers 11 Advantages Over Most Other Lending Entities
- Our primary lending partner does not require clients to requalify for their loan annually… they simply must be able to address and/or post any additional collateral when and if required.
- Our primary lending partner provides a 100% Advance Rate (i.e. credit on CSV) for the purpose of establishing potential additional collateral requirements.
- Our primary lending partner does NOT require a Personal Guarantee (PG) on the loan (some exceptions may apply)
- Our primary lending partner offers a unique borrowing structure that may offer the potential for tax advantaged interest payment structures
- Our primary lending partner offers and guarantees each client the right to make 1 Free Material Change throughout the life of their loan without incurring a breakage penalty.
- Our primary lending partner offers the option to accrue (i.e. roll up) interest. (some carriers restrict and/or forbid this consumer friendly benefit / option)
- Our primary lending partner allows the client to determine the exact $$ amount they prefer to pay in interest payments (if any)
- Our primary lending partner offers MYG Loan Interest Rates… and Rate Caps available at any time throughout the life of the loan for periods up to but not exceeding 5 years.
- Our primary lending partner offers clients the option to implement a Rate Cap or Collar thereby capping the loan interest rate for up to 5 years
- Our primary lending partner is the longest tenured Lender in the space at 15+ consecutive years and going strong
- Our primary lending partner is a Balance Sheet Lender
Premium Finance Guidelines
- Accordia Guidelines
- Allianz PF Guidelines
- Lincoln Financial Guidelines
- LSW Guidelines
- Voya Guidelines