Client/Insured

TBG's typical clients are high net worth individuals who have a demonstrable need for large amounts of life insurance as part of their estate, charitable giving and/or business planning. The average client is 50-65 years old with a net worth of $40-60 million, with many clients worth more than a billion dollars. We have clients as young as 33 and as old as 93. TBG's clients choose to finance these policies so that their cash flow and/or investments need not be interrupted or liquidated to fund the policy; the client's investment portfolio can continue to grow without interruption; and the client's estate is protected at death.

More particularly, the client insured must:

  • Be worth an absolute minimum of $10 million dollars and
  • Have an annual income of at least $500 thousand.
  • Have ample liquidity (or projected liquidity) to continue paying premiums if the deal collapses or to make interest payments at maturity.
  • Have a balance sheet substantiated by a public accountant or other qualified source.
  • Be acceptable to the Lender's Know Your Client requirements.
  • Meet all the underwriting criteria of the insurance company.
Structure

Borrower

TBG structures and arranges different variations of its financed life insurance product depending on the specifics of the client's particular goals. Common to each structure is, typically, a universal life insurance contract owned by a trust or irrevocable life insurance trust ("ILIT"). TBG coordinates with its network of third party legal advisors or those of the client to arrange the establishment of the appropriate trust. For tax purposes, the trust is the owner and beneficiary of the life insurance contract. The trust (not the client/insured) is typically the borrower on the premium finance contract. The lender receives a security interest in the cash value and death benefit of the underlying policy as collateral. The interest on the loan and certain placement fees can also be capitalized. UL and IUL insurance provides permanent life insurance protection and access to cash values that grow tax-deferred. Thus, there are benefits to the Insured during his/her lifetime as well as benefits to the Insured's estate at death.

TBG has longstanding relationships with over 20 life insurance companies. After working with a client to define the policy needs, TBG solicits quotes. The companies that TBG uses are generally AA-rated by S&P or higher. Each carrier has knowledge of and an appreciation for premium finance as a strategy. TBG advises many of these companies on the development of products that work more efficiently for premium financed transactions.

Lender

After securing favorable underwriting, TBG then arranges the appropriate financing from well-recognized international lending institutions or banks. These are not standardized loans and each Lender has its own risk analysis, pricing, collateral requirements, treatment of interest, documentation, and so forth. TBG adds value by fully understanding each Lender's program so that it can pair the client with the most appropriate and cost-efficient Lender. In the case of one primary lending partner, TBG designed the loan program to narrow interest rates and hedge currency fluctuation. This design works particularly well in the premium finance model.