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Premium Financing

Premium Financing. A service provided by BAKER ASSOCIATES. What is Premium Financing?. Premium Financing is a method for individuals to fund a life insurance policy without using liquid assets. How does it work?. Borrower applies for life insurance policy

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Premium Financing

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  1. 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) (A) Broker (E) (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 *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: gbaker@bakco.com Frank Azar: fazar@bakco.com Lori Calloway: lcalloway@bakco.com Lisa Sauer: lsauer@bakco.com BAKER ASSOCIATES 888-899-6599 www.bakco.com 7502 E Pinnacle Peak Rd, Ste 116B Scottsdale, AZ 85255

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