A great donation to your alma mater can be life insurance. It allows you to leave a donation to the school and gives you the leverage to make the gift that much bigger. The donor simply pledges the policy to the university and makes the university the beneficiary. When the donor passes away, the death benefit flows into the university’s coffers. Often times the life insurance pledge can be targeted for a specific purpose at the university. For example, the donor may really care about the basketball program and want the death benefit to go to the building of a new stadium.
On top of the fact that you can provide such a nice benefit to your university, it can also provide you with estate and tax planning benefits. Talk to your professionals about this, before you consider such a gift, but there may be tremendous value in it. One of the stategies that is being used at many of the universities to create larger death benefits is through premium financing. The client will not have to come out of pocket for as much of the premium this way and may allow them to purchase a much bigger death benefit. For example a premium for 6 million dollars of life insurance might require a premium of 200,000 a year. If the client can pay a small fraction of the 200,000 and still get the full benefit, then it provides them with a more attractive solution. So they pay out of pocket 20,000 a year rather than 200,000 and still get a benefit of 6 million dollars.
Many individuals with a net worth of 5 million or more are most likely eligible for a Premium Financing Life Insurance Program. Easily explained: While most pay cash to fund their life insurance policy, when you premium finance life insurance, you will get a loan from a bank to pay the premiums. The lender or bank is on the life insurance policy certificate and is repaid later on from the death benefit. This helps the purchaser to acquire an insurance policy without having use his immediate cash flow. The lender of the loan can either be collateralized by other assets of the purchaser or not. If you do not decide to collateralize the loan, expenses will become greater. This strategy has become very popular these days…
In some instances these arrangements are sometimes referred to as “free insurance”, because of the arbitrage you make on the loan. The individual who took the loan to buy the life insurance is hedging that the performance of the life insurance policy exceeds the lending rate of the bank. When low interest rates come around like in the marketplace today, this is usually an easy hedge. If high interest rates are evident you have to look at the other value adds a premium financed policy gives you.
Be sure to get with your life insurance advisor to see if you qualify for this amazing program….. Read More here on Premium Financing.
The world today can be very litigious and the risk of getting sued is high. It is important to work with your financial advisors to create as much of a bulletproof plan as you can. While that would be the goal, it is very difficult to avoid all possible risk.
One necessity of this is to have the proper insurance planning. Two products that are protected from creditors are cash value life insurance and annuities. Often these products are used by physicians or others professionals to protect there assets with malpractice and personal liability being such a big issue in today’s marketplace. Premium financing has become very popular using insurance and annuities.
Not only do you get the creditor protection with the products but you also get tax advantages with each one. With Annuities the growth is tax deferred and with life insurance the growth in the cash value can be accessed tax free if used correctly. Annuities are not necessarily a good fit for everybody, but with the right application they can be very effective. To read more about cash value life insurance and annuities you can read about it on www.massmutual.com.
If you haven’t established a risk mitigation plan, you may want to speak with your financial advisors and take a look at how these products and others might be added to your plan.
