TAX PLANNING

What is Premium Financing?

Premium financing allows individuals who have a life insurance need to defer using their liquid assets to fund a life insurance policy (When the funds to pay premiums can be better used elsewhere). In a premium financing arrangement, you (or your trust or corporation) can take out a loan from a third-party lender to pay the premiums on a life insurance policy. Premium financing can significantly reduce out-of-pocket costs as well as gift tax costs on large life insurance policies and in cases where businesses use premium financing for keyman, succession planning, or deferred compensation arrangements, the interest paid by the business can be deducted as an expense.

Premiums for these policies can be expensive, though – that’s where a Leveraged Planning solution can help.

By using a commercial loan approach, the firm can protect business asset liquidity while still providing a suitable compensation structure designed to appeal to their executives.

What Are Some of the Benefits and Considerations of CMS?

BENEFITS

• Helps you increase financial flexibility by utilizing third party funding to pay your life insurance policy premiums.
• Minimizes up-front “out-of-pocket” expenses to secure life insurance coverage.
• Reduces the impact of purchasing large life insurance policies to current assets.
• May mitigate gift tax exposure for trust owned policies.

While many clients understand the “traditional” way to structure and pay for permanent life insurance, Succession Capital Alliance can demonstrate an option to finance the premium payments

Harness the Power of Life Insurance Without Liquidating Assets

What Is the Capital Maximization Strategy? The Capital Maximization Strategy (CMS) is an innovative premium financing strategy that provides you with the funds to pay your life insurance premiums without liquidating assets to cover the full premiums.

With CMS, you borrow funds at competitive interest rates to pay your life insurance premiums. You provide collateral to secure the loan through the policy’s cash value and other performing liquid assets. The policy death benefit is assigned to the lender to cover the outstanding loan balance in the event of death prior to the loan repayment. The remaining death benefit is paid to the beneficiaries.

The Capital Maximization Strategy can be used for:

• Estate Planning
• Business Continuation Planning
• Potential Asset Accumulation
• Asset Protection

When considering premium financing, success can depend on working with a team that has expertise and experience using this strategy. Succession Capital Alliance (SCA) is the exclusive provider of CMS.

Using leverage to significantly increase buying power and enhance the potential benefits of life insurance the Northstar Funding Partners (NSFP) Insured Retirement Advantage® (I.R.A.®) is a unique approach to obtain life insurance for business protection needs, supplemental income and traditional estate and retirement planning. It carefully applies leverage, innovative product solutions and a custom design to enhance a variety of planning strategies. Designed with a focus on the small business owner and emerging affluent professional the NSFP I.R.A.® provides you the opportunity to introduce the concept of financed life insurance to a significantly wider range of prospects – clients that are not typically eligible for conventional financing arrangements.

• Estate Planning
• Key Person Policy Funding
• Buy/Sell Agreement Funding
• Executive Bonus arrangements and other life insurance based solutions