Posted by OninsurGuru©️Insurance AcademyPrevious"What exactly is insurance policy financing?Can I borrow money from the bank to buy U.S. life insurance?How big is the risk? "In the column, senior industry expert Jim followedAmerican Life Insurance GuideThe readers shared the concept of insurance policy financing and introduced a "typical" policy financing plan. Finally, they also conducted a risk stress test under historical data on the use of index-type insurance policy financing plans.
In today’s column, we will continue to go deeper and use a specific strategy case to compareThe difference in the return of the insurance policy in the two cases of using and not using the policy financing strategy.
Case Analysis of Large Insurance Policy Financing
Today, I want to invite our case. Jeff, male, 45 years old, runs a polymer material company. The company's business conditions are stable and there is continuous cash inflow every year.
Jeff has a happy family with two children and he is about to go to college.
Jeff began to consider looking for one while he was young20 years of mid- to long-term financial strategy, Can provide stable expenses after 65 years old. Jeff doesn't smoke, he likes to play golf with his friends, and he is very healthy.
Jeff intends to invest $24 in this financial plan. Jeff plans to withdraw money from the insurance policy every year from the age of 65 to maintain the family's expenses until he is 90 years old. A total of 25 years will be required to withdraw.
Let's take a look at how much tax-free money can be taken out of the insurance policy each year, and the comparison of the two plans.
Conventional non-financing plan
Let’s take a look first. According to the conventional plan of depositing $48,000 per year for 5 consecutive years and not using policy financing, Jeff’s policy account performance:
The plan selected a top insurance company with strong cash value performance, and adopted a company that can pay off in 5 years.Index policyAs a container.After depositing $5 per year for 48,000 consecutive years, the program strategy began to operate steadily. With an average annual forecast income of 6.9%, Jeff will receive a tax-free retirement income of $50,889 every year after his retirement age.
The collocation design of the product and the strategic plan has invested a total of US$24, and has drawn a total of US$127 million. The leverage ratio has reached1:5.2.If Jeff passes away at the age of 100, he will also leave a tax-free inheritance of $117 million for future generations.
1 to 3 policy financing solution
U.S. Life Insurance Guide Network Next Use PreviousColumn ArticleThe mentioned 1 to 3 financing plan, under the same conditions of product selection, predicted interest rate, and health rating, will carry out policy financing in accordance with the following strategic agreement.
- For the first 5 years, Jeff deposited $48,850 in premiums each year and paid a total of $24.4
- The loan bank deposits an annual premium of $5 for the first 47,371 years
- From the 6th year to the 10th year, Jeff stopped depositing premiums
- The loan bank deposits a premium of $6 each year from the 10th to the 94,871th year
- The interest rate of the financing contract is LIBOR + 1.75%
After financing the policy according to this strategy, Jeff has deposited a total of US$24.4 ($244,250) into the policy account, and the loan bank has deposited a total of US$71.1 ($711,210).The ratio of principal to loan is 1:2.91, which is close to 1:3.
The financing strategy plan uses an insurance company that can be paid off in 10 yearsIndex policyAs a container, it is designed to be paid off in 10 years.With an average annual forecasted income of 6.42%, the strategy of the plan began to operate stably. The cash value of the policy account exceeded $300 million. At this time, Jeff owed a bank loan and accumulated interest of $89.
After 11 years, due to market changes, the borrowing rate rose to 5.03%, and Jeff considered directly using the policy money to repay the loan.
In 15 years, Jeff decided to use the cash value rolled out in the insurance policy to repay the accumulated bank debt for 15 years: $109 million.Subsequently, the policy account was completely owned by Jeff.
Twenty years later, Jeff decided to take money from his policy account as retirement income from the age of 20. The annual amount he can receive is $65, and it is completely tax-free.
With the design of the product and strategic plan, Jeff has invested a total of US$24.4 and withdrawn a total of US$257.5 million. The leverage ratio has reached1:10.5.Accumulated than conventional insurance plans$130.5 million moreUS dollars.
If Jeff passes away at the age of 100, he will also leave a sum of $ for future generations514 millionThe tax-exempt inheritance is more than 4 times that of the conventional plan.
(>>>Recommended reading:Comparison of advantages and disadvantages and risk evaluation of family wealth retirement plans through premium financing )
Article summary
American Life Insurance Guide.com believes that a large-value policy premium financing strategy is a professional and powerful tool-based financial strategy. The entire process involves banking departments, trust management agencies, legal service agencies, tax service agencies, financial insurance companies, andProfessional insurance brokerSuch multi-party collaboration has a relatively high degree of complexity and specialization.
If our after-tax personal income is more than $10, we are more concerned about the leveraged income brought by insurance policy financing, and we have a full understanding and understanding of the related risks. We can consider working in a professionalPolicy Financing BrokerWith the help of the company, choose suitable financing products and financing strategies to achieve the goal of maximizing growth potential.
American Life Insurance GuideWill continue to followLarge insurance policy financingFor related content, for industry brokers or industry financial consultants who have insurance policy financing plan needs or have relevant experience, welcome to communicate, learn and discuss with us and the columnists.
