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Home » Premium Financing » Exit Strategies

Exit Strategies

June 15, 2019 12:37 pm

At RSB Life, we remain dedicated to doing our utmost to make sure that our clients understand the entire premium financing process, from start to finish. It is our responsibility to give you access to all the information surrounding your legacy planning and include the options should the unforeseen take place.

It’s important to see the big picture.

Life can present you with some unexpected twists and turns. So while you hope that you’ll be able to see a premium financing strategy through to the end, things may change down the road. We’re here to reassure you that change is something we can anticipate, and we’re prepared to adjust your plan so you still get the maximum benefits no matter what happens in life.

From the underwriting process to the completion of paying off your loan or choosing another exit path, RSB Life will stand strong as your ally throughout. We pour time and energy into our clients’ strategies to make sure we’re staying on course as the years go by. We know how easy it can be to take one’s eyes off the prize, and we’re here to make sure your goals stay front-and-centre even if you have to exit the strategy early. If you find yourself needing to change plans, rest assured that we will continue to stay close every step of the way.

Here are the four main ways that you can exit your life insurance premium financing strategy if necessary.

Strategy 1 – Policy Death Benefit

We use this strategy when a client passes away. If a client passes before the loan is satisfied, the life insurance benefit will pay the loan out first. The remaining balance will be paid out to the trust and get distributed in whatever way the client predetermined, typically to family and other loved ones or a charity of choice.

The following three strategies can be combined in any way that works best for you.

Strategy 2 – Policy Values

In this strategy, we use the cash value that has accumulated in the life insurance policy to satisfy the loan. The policy is then left to run traditionally for the rest of the client’s life while we monitor it, running in-force analyses each year so that changes are made to adjust variation.

Strategy 3 – Side Fund

In this strategy, we set up a side fund like an investment account or real estate fund that will accumulate money at a specific interest rate. We plan things out so that, by year 10 or 11 the side fund has grown enough to completely satisfy the outstanding loan.

Strategy 4 – Continuation

In this strategy, we keep the loan active as well as the policy values and focus our energy on maintaining a good arbitrage between the two so that you can keep the loan active, enjoy the protection of the policy and grow your cash value within it.

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"Our strategy is an opportunity for your family or business to purchase a very large amount of life insurance that when properly designed and managed will create a substantial tax preferred supplemental income stream with a low initial out of pocket cash commitment. "

Ran. RSB Life

"The benefits of financing your life insurance premiums is a powerful option."

Rita. RSB Life

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A person’s life is often compared to the life cycle of a tree. From a sprouting seedling to a sprawling forest, we grow with each graduating phase.

Don’t lose the fruits of your labor. Instead, learn more about premium financing from our dedicated team today.

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©2020 RSB Life. Do Not Copy.
This material was prepared for general distribution. It is being provided for informational purposes only and should not be viewed as Tax Advice. If you need advice regarding particular tax needs, contact a tax planning professional. We are not a lending institution.

Premium financing programs are subject to various risks including: Interest rate risk - most programs use a floating rate; Lender risk - the strength and stability of the financial institution providing the financing; Carrier risk - the strength and stability of the insurance carrier issuing the policy; Policy performance risks - failure of the policy to perform as originally illustrated, may result in additional premiums and loans and collateral risk - the value of the collateral used may decrease resulting in the need for additional collateral to secure the loan, or the lender calling the loan. There may be other risks as well.
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