Premium Financing

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Premium Financing

• A service provided by
• BAKER ASSOCIATES

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What is Premium Financing?

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

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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

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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

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Third party lenders
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Third party lenders
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Possible Client

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

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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

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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)
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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.

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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

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Example of Benefits
Term Insurance Premium Finance Premium Finance
Client Age Total Costs for 20 years 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.
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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

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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

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Contact Baker Associates
Gary M Baker gbaker_at_bakco.com Frank Azar
fazar_at_bakco.com Lori Calloway
lcalloway_at_bakco.com Lisa Sauer
lsauer_at_bakco.com
888-899-6599 www.bakco.com

• BAKER
• ASSOCIATES

7502 E Pinnacle Peak Rd, Ste 116B Scottsdale, AZ
85255