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Premium Financing Case Study:

NJ Couple Both Age 54

Net Worth: 5 M
Combined Annual Income: $600K
Initial Death Benefit: 10 M each, 20M combined

Premium Financing 

Simple interest rate: 2.75% fixed for 7 years
(as of July 6, 2020, this rate is updated daily)
Option to renew after 7 years
Pay off after 15 years:
Husband: $5,923,576
Wife:$4,971,099

Over Funding an Index Universal Life Product

Out of pocket premium: $0
Projected compound interest-earning: 5.5 %
Rider – high cash value 100% for 7 years:
Annual premium for husband (best health rating): $592,358
Annual premium for wife (standard health rating): $497,110

Tax-Free Annual Income from Age 75 Till Death:
(Policy loan is not considered income)

Husband: $475,644
Wife: $334,586

* All based on projection.

DISCLAIMER

*Receipt of benefits depends on rider and meeting certain qualifications and varies by state. The use of one benefit may reduce or eliminate other policy and rider benefits. Payment of living benefits will reduce the cash value and death benefit. Substantial tax ramifications could result upon contract lapse or surrender.

Surrender charges may reduce the policy’s cash value in the early years. It is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. This information is not intended as tax advice. Please consult with your tax advisor regarding your own situation. Not all riders are available by all life insurance companies.