Delivering Solutions

Q1. This product seems too good to be true. How is it possible for me to obtain premium financing with little or no out-of-pocket cost and still realize a benefit?
A1. With just minimal or no out-of-pocket costs, life insurance premium financing is a loan that allows affluent clients to buy life insurance using the new policy as primary collateral. This not only defers costs, but also frees up cash flow. Loans can then be repaid by the client’s trust, current assets or by the death benefit of the life insurance policy. When the time comes for settling the estate, the loan against the policy used for premium financing is paid from the policy’s death benefit amount.

Q2. Does life insurance premium financing replace my existing life insurance coverage?
A2. Maybe, if you utilize an Internal Revenue Code section 1035 exchange the value of your life insurance existing policy can be transferred to a new financed life insurance policy. Otherwise, senior life insurance financing options add another financial asset to your portfolio in the form of a life insurance policy. For use with non-registered products only. The insurance products described may be issued by various companies and may not be available in all states. All comments about such products are subject to the terms and conditions of the insurance contract issued by the carrier. These materials are provided for educational purposes only. Banyan Life Financial, LLC makes no representation regarding the suitability of this concept or the product(s) for an individual nor is Banyan Life Financial providing tax or legal advice. You should consult your own tax, legal or other professional advisor. To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Q3. Are the life insurance companies utilized in premium financing highly rated?
A3. Yes, the banks providing the premium finance loans typically work with only premier, A-rated life insurance carriers.

Q4. What are the downsides to life insurance premium financing?
A4. Like all life insurance, there are limits to the total amount of insurance that can be issued. If the total amount of life insurance issued equals the applicant’s insurable net worth, it will likely limit the ability of the applicant and others to purchase additional life insurance coverage on the applicant. If the applicant’s insurable net worth increases, additional life insurance capacity may exist. Other considerations when financing include the interest rate, repayment or exit strategies, net death benefit and taxation.

Q5. Are applicants or the beneficiaries responsible in any way for the loan?
A5. Yes. In fact, a promissory note is usually signed by a client’s trustee. Although beneficiaries are not responsible for the loan, the insured is clearly a party to the closing documents. Similar to what Lending Tree^® does for residential mortgages, Banyan Life Financial submits the loan to many lenders that compete for the client so the terms are as favorable as possible. It is obviously important for clients to have their CPA and/or attorney review the life insurance product and loan terms to confirm the estate planning benefits of the life insurance policy outweigh the risks involved.

Q6. Does the applicant have to put up any personal collateral?
A6. Yes, there is often a choice of additional collateral that can be utilized. The newly issued life insurance policy is typically the primary collateral, supported by additional collateral such as a personal guaranty, Letter of Credit, art, real estate or other liquid assets.

Q7. How can the applicant’s beneficiaries benefit?
A7. Beneficiaries enjoy the economic benefit of life insurance. Typically, they receive a significant tax-free net death benefit to cover inheritance or estate taxes associated with wealth transfer.

Q8. The applicant already has life insurance. Why does he or she need a premium loan?
A8. A life insurance premium loan may enable him or her to derive financial benefits for the applicant, the applicant’s family or the applicant’s favorite charity, without any effect on the applicant’s existing life insurance and with no or little out-of-pocket expenses while mitigating additional exposure to the estate and mitigating gift taxes.

Q9. How can I utilize life insurance to benefit a charity?
A9. Life insurance often augments a client’s estate plan in combination with charitable giving. Clients should seek the advice of their advisors on how to make planned gifts. A client’s favorite charity or charities can be the beneficiaries of financed life insurance policy.

Q10. Are carriers approved or acknowledged?
A10. Yes, we believe in offering life insurance premium financing products that have been reviewed and/or approved by the insurance carriers. The lender or terms are typically acknowledged and included within the confines of the formal insurance application.

Q11. How do we get started?
A11. Simply fill out the 2-page informal inquiry located here. This is a confidential no-obligation inquiry and allows us to underwrite and provide preliminary terms in about 30 - 60 days.

Q12. What are laws regarding estate taxes going be in the future?
A12. The exemption is expected to increase into 2009, and then no federal estate tax in 2010. Although impossible to predict, it is widely believed that in 2011, the estate tax is very likely to return with an exemption level at or above $1 million. It is extremely important to protect your estate for a “worst case scenario” and consult your tax and legal advisors. For use with non-registered products only. The insurance products described may be issued by various companies and may not be available in all states. All comments about such products are subject to the terms and conditions of the insurance contract issued by the carrier. These materials are provided for educational purposes only. Banyan Life Financial, LLC makes no representation regarding the suitability of this concept or the product(s) for an individual nor is Banyan Life Financial providing tax or legal advice. You should consult your own tax, legal or other professional advisor. To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Q13. What states do you cover?
A13. Although Banyan Life Financial is located in Miami, Florida, we can provide senior life insurance financing solutions for clients on a national basis.

Q14. Is this similar to Non-Recourse Premium Financing?
A14. No. Life insurance premium financing varies sharply from non-recourse life insurance premium loans - sometimes known as “spin-life insurance”. These methods routinely place applicants and their families under unfavorable terms, questionable interests from other parties, and even a reduction or elimination of life insurance coverage over time. Banyan Life Financial only supports safe, ethical life insurance premium financing and senior life insurance financing plans that allow applicants and families to maintain coverage with terms that are favorable for everyone concerned.

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