Case Study A
 |
 |
| (82yr old Female; Hybrid Financing; Policy + 25% Personal Guarantee as Collateral) |
| Client "Self Funds" Assumption |
| Total Face |
$10,000,000 |
| Premiums (Yr 1 + 2) |
|
| This item is "out of
pocket" to the client |
-746,716 |
| Interest/Earnings Utility Lost By Use of Own Capital |
|
| This item is "out of
pocket" to the client |
-70,938 |
| Rate:
9.50% |
|
| Trust Creation and Maintenance Fees |
|
| This item is "out of
pocket" to the client |
-20,000 |
| Total two year cost of insurance |
($837,654) |
| |
|
| Out of pocket risk |
$837,654 |
| |
|
Client Premium Finances Assumption
(Using Policy + Partial Personal Guarantee as Collateral)
|
| Total Face |
$10,000,000 |
| Premiums (Yr 1 + 2) |
|
| This Amount is Financed |
-746,716 |
| Interest (Yr 1) |
|
| This item is accrued - Rate:
9.50% |
-70,938 |
| Interest (Yr 2) |
|
| This item is accrued - Rate:
9.50% |
-77,677 |
| Fees (Trust Creation, Maintenance and Loan) |
|
| This Amount is Financed |
-55,000 |
| Total two year cost of insurance |
($950,331) |
| |
|
| Out of pocket risk (25% Personal Guarantee) |
$237,583 |
| |
|
|
 |
| (50yr old Male; Traditional (LIBOR based) Financing; Alternative Assets as Collateral) |
| Client "Self Funds" Assumption |
| Total Face |
$25,000,000 |
| Yearly Premium 299,227 |
|
| Premiums (Yr 1 + 2) |
|
| This item is "out of
pocket" to the client |
(2,992,270) |
| Interest/Earnings Utility Lost By Use of Own Capital |
|
| This item is "out of
pocket" to the client |
(929,354) |
| (Yrs 1 - 10) Rate: 12% |
|
| Trust Creation and Maintenance Fees |
|
| This item is "out of
pocket" to the client |
(60,000) |
| Total ten year cost of insurance |
$3,981,624 |
| |
|
| Out of pocket risk |
$3,981,624 |
| |
|
Client Premium Finances Assumption
(Using Policy + Partial Personal Guarantee as Collateral)
|
| Total Face |
$25,000,000 |
| Yearly Premium 299,227 |
|
| Premiums (Yr 1 + 10) |
|
| This Amount is Financed |
(2,992,270) |
| Interest (Yrs 1 - 10) |
|
| This item is "out of pocket" to the client |
(646,009) |
| Rate 8% |
|
| LIBOR + 2% (fluctuates, caps may be bought) |
|
| Fees (Trust Creation, Maintenance and Loan) |
|
| This item is "out of pocket" to the client |
(60,000) |
| Total ten year cost of insurance |
$3,698,279 |
| |
|
| Out of pocket risk (25% Personal Guarantee) |
$706,009 |
| |
|
Please note: These estimates are for illustration purposes only and all numbers are subject to revision and change. Please consult a financial professional before the purchase of any life insurance policy. Finance For Life does not provide tax advice. Please consult your tax professional to determine tax consequences, if any.
