LIFELOAN^® Program

Specifics of the LIFELOAN^® Program

The LIFELOAN^® Program offers a loan, called a LIFELOAN^® Funding, to a qualified life insurance policy owner or portfolio manager using the policy (or portfolio) as collateral. This eliminates all premium payment obligations by the policy owner going forward and is structured to maintain a beneficial interest in the maturity proceeds by the original beneficiary. It is secured by filing a collateral assignment with the insurance carrier and an agency agreement with a nationally recognized banking institution.

The agency agreement assures that a national bank controls the payment of premiums and the collection of death benefits. Upon policy maturity, the bank receives the net death benefit, pays the principal loan balance plus interest and remits the remainder of the net death benefit to the original beneficiary of the policy. The loan can be paid back prior to the demise of the insured in which case the bank will cause the insurance company to remove the collateral assignment against the policy, reverting it back to its original status.

A LIFELOAN Funding can be made on most types of policies, including policies held in Irrevocable Life Insurance Trusts (ILITs). To qualify, insureds need to be at least 70 years old and have an actuarially-determined life expectancy of approximately 15 years or less. The projected average policy will have a net death benefit of $1,000,000 or higher. Policy owners can be the insured as well as corporations, partnerships, trusts, or charitable institutions.

Benefits of the LIFELOAN^® Program to the policy owner

The LIFELOAN^® Program meets the needs of senior citizens and their estates or portfolio managers nationwide by providing a non recourse loan to pay all future premiums using the policy (or portfolio) as sole collateral. The policy owner does not need to surrender the policy to the insurance company or sell the policy as a life settlement. The owner continues to own the policy and the beneficiary will be entitled to receive the death benefit, net of the loan balance upon the demise of the insured.

A LIFELOAN^® Funding preserves the original purpose of the life insurance policy – to pay the net death benefit to the beneficiary. The economic benefit of retaining the policy may be substantially greater than selling or surrendering the policy. For the balance of the lifetime of the policy, the insurance premiums do not need to be serviced by the policy owner because the LIFELOAN Program pays all premiums to maturity. The loan does not need to be secured by real estate or other depreciable collateral of the insured and the loan is not based on or limited by credit history, FICO score, or other credit factors. Transactional costs and commissions are projected to be lower than traditional life settlement transactions. The LIFELOAN Program provides the flexibility to the owner to meet both liquidity needs and estate planning or other insurance objectives.