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A service provided by BAKER ASSOCIATES

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Presentation on theme: "A service provided by BAKER ASSOCIATES"— Presentation transcript:

1 A service provided by BAKER ASSOCIATES
Premium Financing A service provided by BAKER ASSOCIATES

2 What is Premium Financing?
Premium Financing is a method for individuals to fund a life insurance policy without using liquid assets.

3 How does it work? Borrower applies for life insurance policy
Baker Associates will fight for best possible underwriting offer Borrower applies for premium financing through a third party lender

4 Third party lender Sets interest rate and payment schedule for loan
Requires collateral Life insurance policy Additional assets Baker Associates works with several carriers and banking facilities

5 Third party lenders

6 Third party lenders

7 Possible Client High net worth client Large insurance need
Assets highly productive or illiquid Reluctant to free up premium dollars

8 Client Eligibility $5,000,000 Net Worth minimum
$100,000 minimum annual loan (premium) Ability to post additional collateral if needed Borrower must be an entity (Trust/ Corporation) Individuals eligible in CA and NY

9 BAKER ASSOCIATES Borrower (Trust) Broker Baker Associates
(G) Baker Associates Insurance Company (B) (C) (A) Borrower requests services from broker (B) Broker engages Baker Associates (C) Baker Associates develops insurance program (D) Baker Associates presents to Bank (E) Bank makes offer and documents loan (F) Bank secures collateral (G) Death Benefit satisfies outstanding loan with balance paid to the Borrower (D) (G) Bank (Lender) (F)

10 Concerns Interest rate risk Collateral requirements Potential loan maturity Unrealistic market expectations Most of these concerns are mitigated by proper structuring of the life insurance policy and loan.

11 Benefits Reduced out-of-pocket cost for life insurance coverage
Minimal or no impact on current investment portfolio Attractive interest crediting rates on borrowed funds Effective gift tax considerations

12 Example of Benefits 45 55 65 Term Insurance Premium Finance $249,300
Client Age Total Costs for 20 years* 1st year out of pocket costs Saving to acquire Permanent Insurance w/Premium Financing 45 $249,300 $117,448 $46,675 $131,852 55 $595,300 $193,267 $62,500 $402,033 65 $1,959,300 $665,360 $95,750 $1,293,940 *Based on preferred non-smoker rate; interest on premium loan capitalized.

13 Baker Associates’ Services
Collection of required information for insurance policy Case design and illustration Tenacious underwriting for client Assist you in explaining options to client Negotiate to provide the best financing available for your client

14 What carriers participate?
Through Baker Associates you can access this special program with one of these top insurance carriers: John Hancock/ Manulife American General MONY/AXA Jefferson Pilot Lincoln Life

15 Contact Baker Associates
Gary M Baker: Frank Azar: Lori Calloway: Lisa Sauer: BAKER ASSOCIATES 7502 E Pinnacle Peak Rd, Ste 116B Scottsdale, AZ 85255

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