[On-screen disclosure] For financial professional use only - not for use with the public. [End of on-screen disclosure]
[Narrator] Premium financing and the power of leverage.
Here's something to think about. How do high-net-worth clients become high-net-worth clients?
Chances are, they've used the power of leveraging, using borrowed money as a funding source for their investing.
And for these high-end clients, leveraging can work for buying life insurance, too.
[On-screen disclosure] This strategy may not be appropriate for all individuals. [End of on-screen disclosure]
It's called premium financing, and it can offer significant financial benefits.
With premium financing, an individual borrows money from a bank or other third-party financial institution, and uses that money to pay the premiums on a large life insurance policy.
This way, they can purchase high-value coverage without having to liquidate assets, such as a business or other investment, which can incur taxation.
The bank loan and interest are repaid to the institution by the policyholder using their own funds or by drawing on the policy's cash value through policy loans or withdrawals.
[On-screen disclosure] Policy loans and withdrawals will reduce the available cash value and death benefit and may cause unintended consequiences, including lapse or taxable events. Please see full loan and withdrawal disclosure within this material for details. [End of on-screen disclosure]
If the individual dies before completing repayment, the bank loan is repaid from the death benefit.
[On-screen disclosure] If the policy owner dies before paying off the bank loan, their beneficiaries recieve any remaining death benefit after the bank loan is repaid first. [End of on-screen disclosure]
Premium financing may be suitable for high-net-worth clients that are looking to address wealth transfer, inheritance or estate planning issues, business planning needs, or a need for supplemental retirement income.
Of course, a premium financing strategy is not meant for everyone and does carry associated risks, including potential interest rate increases on loans, the possibility of a lender not renewing the annual loan, or the policy not performing to expectations, which could result in a policy lapse and potential tax consequences.
And of course, because this is a life insurance product, applicants must meet health and financial underwriting requirements.
But for those who qualify, Allianz has a track record in premium financing.
Our fixed index universal life insurance includes innovative index options designed to perform in a variety of markets.
We have a deep bench of vetted and approved quality premium finance vendors and a 98% inforce rate on premium financed policies.
Allianz can help your high-net-worth clients use the power of leveraging to get the coverage they need and help you make the most of this opportunity for bigger sales.
To find out more about Allianz premium financing, including target clients, requirements, and associated risks, contact your divisional vice president.
[On-screen disclosures]
Any strategy that includes life insurance is subject to health and financial underwriting. Your clients should consult their tax advisor and/or attorney to discuss their specific situation.
Clients should be aware of all the risks present with a premium finance strategy.
This content is for general educational purposes only. It is not intended to provide fiduciary, tax, or legal advice and cannot be used to avoid tax penalties; nor is it intended to market, promote, or recommend any tax plan or arrangement. Allianz Life Insurance Company of North America, its affiliates, and their employees and representatives do not give legal or tax advice. Customers are encouraged to consult with their own legal, tax, and financial professionals for specific advice or product recommendations.
Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Withdrawals in excess of premiums paid will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10% federal additional tax may be imposed. Tax laws are subject to change and you should consult a tax professional.
For financial professional use only – not for use with the public.
This content does not apply in the state of New York.
Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. www.allianzlife.com
Product and feature availability may vary by state and broker/dealer.
Life insurance guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. www.allianzlife.com
[End of on-screen disclosures]
