The Premium Financing System illustrates life insurance owned by an irrevocable life insurance trust (“ILIT”), an individual, a business, or an executive. The primary benefit is to obtain a significant amount of life insurance coverage at a reduced cash flow cost, and virtually any cash value life insurance policy can be funded in this manner.
The goal is to profit from arbitrage which, in this case, can be defined as the attempt to profit by exploiting differences between the interest rate charged for premiums funded by bank loans and the credited interest rate of the life insurance policy securing the loan.
When the life insurance policy is owned by an ILIT, a primary benefit of premium financing is the funding of estate taxes at little or no cost.
When the life insurance policy is owned by an individual, a primary benefit of premium financing is family protection at little or no cost.
When the life insurance policy is owned by a business, a primary benefit of premium financing is key person coverage or stock redemption at little or no cost.
When the life insurance policy is owned by an executive, it typically involves an executive who is provided with an executive bonus plan in which the income tax on the bonus is financed at little or no cost.
Be sure to review the PowerPoint presentation to learn all the capacity of this new InsMark System.
