THE SITUATION
Husband and wife in their early fifties had been looking into investing in life insurance when the pandemic struck. They are both business owners with high opportunity cost on their money. The husband’s business had to shut down due to the pandemic and the wife’s real estate portfolio, with exposure both to the US and Ecuador, was also significantly hit.
Although they were very interested in life insurance in the beginning of 2020, due to COVID-19 they were scared to move forward. Their major concern was having to pledge significant collateral as they wanted to maintain liquidity during these uncertain times.
OUR SOLUTION High Early Cash Value Contracts:
$5M Coverage for Each Spouse
For these clients, the lynchpin of the strategy was maintaining liquidity while getting the coverage they needed. That’s when the High Early Cash Value (HECV) solution came into play, allowing the clients to take advantage of smart credit strategies while minimizing out-of-pocket pledging of collateral.
In this $10 million HECV contract, the client only pledged $20k as collateral and was able to finance the premium of $500k with the policy’s $490k cash value from day one. If the clients don’t access the cash value or even if they borrow against it, the cash value of the policy will continue to grow year over year comparable to an AA+ bond with a multiplier in the case of an untimely demise.
This solution is very attractive to real estate investors interested in maintaining maximum liquidity and opportunity cost on their money.
OUR PARTNERS
Private Bankers identified the opportunity and worked together with ARI to find the right solution for their clients. Our partners’ understanding of credit strategies and the clients’ needs was paramount in getting the message across and providing protection for their clients in a time of crisis.
