Traditional premium finance refers to a 100% collateralized loan where the primary collateral is the life insurance
policy’s cash value. The Lender receives an assignment of the insurance policy’s cash value and death benefit
to secure the loan they have made to the insured/ILIT to pay the premium(s).
Many products now have riders available to minimize the need for additional collateral. Typically, some other
asset is required to be assigned to or deposited with the Lender to secure any annual shortfall.
We will look at the client’s financial profile, what they are trying to accomplish, any other considerations and then
determine where we feel the most appropriate terms can be secured. We will NOT submit to multiple banks on
behalf of your client.
What is Required For a Term Sheet
1.) 2 years most recent tax returns
2.) Current 3rd party financial statement – may request supporting brokerage and account statements
3.) Copy of owner documentation – ILIT or corporate resolutions
4.) Informal medical underwriting offer – we don’t want to go to the bank until we are confident the insurance can be issued
5.) Policy illustration to be financed
Things to Consider
1.) How liquid is the Net Worth? Regardless of the cash value, the Lender wants some additional liquidity. The exit strategy cannot just be policy ‘surrender’ if the loan is called
2.) Is their income sufficient to service the loan interest?