Q: What is Premium Financed Life Insurance? How does it benefit individuals, for profit companies and nonprofit organizations?
A: These are programs that are oriented to high net worth individuals and corporations whereby a third party pays the premium thus providing the insured to have much greater coverage at substantially lower out of pocket costs.
Q: Why is the IPFA Program better than the life insurance program I can get from my current insurance agent?
A: Most insurance agents are not experienced in this area and do not have the expertise of the financial connections to sell and manage a premium financed program.
Q: How does the program work?
A: It is very similar to other life insurance programs except that we bring in a bank or other well-known lending institution that makes the premium payment and uses the insurance policy as collateral. When the insured dies, the insurance company pays the death benefit into a trust that then pays back the bank for the premiums and a small additional amount for interest. The balance is then divided among the policies’ beneficiaries.
Q: Are there any additional benefits the program offers?
A: Yes, because the insured now has greater coverage at much lower costs, s/he now has the ability to use those funds for other purposes.
Q: How long does the process take from the time I fill out the application until I know that I’m covered?
A: This will vary on a case-by-case basis but generally the process shouldn’t take more than three months.
Q: Am I required to undergo a medical exam? What if I have a pre-existing condition?
A: Yes, this aspect of the program is just like any other individual life insurance policy. Certain pre-existing conditions may disqualify you from the program but you can speak to the licensed agent we assign to your case for specific details.
Q: Is there a cost for the medical exam?
A: The insurance carrier pays this cost. There is no out-of-pocket expense for the insured.
Q: If this program is so good, why haven’t I heard about it before?
A: Most people are amazed to learn that these programs have been around since 1975 when Congress passed a law allowing third parties to pay insurance premiums. However, only very high net worth individual qualified for the program so few companies specialized in it and even today, many agents are unfamiliar with the concept.
Q: How can I be assured the insurance carrier will pay the death benefit?
A: In the entire history of life insurance in the United States, not a single policy has ever failed to pay the death benefit. All insurance carriers contribute to a pool to protect the insured should any carrier go out of business for any reason.
Q: How can I be assured that the bank will continue to pay all the premiums?
A: We understand your concern but to our knowledge, this has never happened. First, banks have access to an almost unlimited supply of money. Second, banks are in the business of lending money. By securing the loan with the cash value of a highly rated insurance policy, the banks are comfortable.
Q: Is this a new high-risk program or do you have a history of success?
A: Our affiliate company will be responsible for your case from start to finish. They have successfully been doing this for almost seventeen years and have written more than $8 billion so the program is well proven and vetted.
Q: Who are the banks and insurance companies involved in this program?
A: We only use A and A+ rated insurance carriers and nationally known banks and financially resources. For a complete list, click on the following links:
Banks and Funding Sources
Programs for Individuals
Q: Will this program affect my total insurability that I may need in the future?
A: That will depend on the specific program you choose. All regular programs will with the exception of the Charitable Giving Program. This is no different from life insurance programs where you are responsible for paying the premiums.
Q: What are the qualifications for a person to participate?
A: Generally speaking, you will need a $5 million net worth for most of our programs. We have certain programs where you will only need to earn $100,000 annually to qualify. You should discuss your situation with the licensed agent we will assign to your case.
Q: Can my spouse join the program also?
A: Yes, as long as your spouse meets all the qualifications for acceptance.
Q: Is it possible to get greater coverage?
A: Yes, just as with any other policy, your coverage will be related to your insurability and that generally means it’s related to your net worth or income.
Programs for Companies
Q: What are the benefits to for-profit companies?
A: This depends on the program they choose and they could choose multiple programs. IPFA’s Employee Retention Program could result in attracting higher quality employees and retaining them for a longer period of time.
Our Buy/Sell Agreements for partners could result in beneficiaries receiving a higher death benefit while the firm retains cash to be used for other corporate purposes.
Q: What are the minimum requirements for an employee to participate?
A: Employees who qualify for IPFA’s Employee Retention Program only need to earn $100,000 annually. Then, using the power of premium financing, we can increase their benefits at a minimum by 400% at no additional out of pocket cost.
Programs for Nonprofit Organizations
Q: How can this program help my church, school, hospital or other nonprofits that I support?
A: The IPFA Charitable Giving Program, at a minimum, could generate about $5,000,000 to the nonprofit for each person who participates… and there is no limit to the number of participants each nonprofit can generate.
Q: What is the benefit to nonprofit organizations?
A: The IPFA Charitable Giving Program could potentially generate more money with less work than any other fundraising program. Even ultra wealthy donors could participate in this program without interfering with their regular charitable giving activities.
Q: How do nonprofits make money from this program?
A: The donation is made on behalf of the donor/insured from the plan. There is ZERO out of pocket cost by the donor. At the lowest level, the nonprofit would receive: $25,000 annually for the first five years; $50,000 annually for the next five years; and then $100,000 annually for the life of the insured.
At the time of death, both the nonprofit and the insured’s beneficiaries would each get about $3,500,000.
Q: Are there any continuing obligations or expenses a nonprofit would incur from their members joining the program?
A: There are no costs to the nonprofit.
Q: How much revenue can a nonprofit generate for each person it refers to the program?
A: That depends on the net worth of the individual and how much insurance s/he chooses to get. At the minimum, it should average approximately $5,000,000 for each participant. Plus, the participant’s beneficiaries also receive millions of dollars tax free so the larger the policy, the more money for both the nonprofit and the insured’s beneficiaries.
Q: How do you propose a nonprofit promotes this program to its members?
A: Virtually every nonprofit we’re familiar with has at least one or more people in charge of fundraising. The larger the nonprofit the more likely they will have a staff of people dedicated to working n this area. These people may not be personally familiar with every donor but you can rest assured they are well acquainted with all their key donors.
Our licensed agent would meet with these people and explain a number of ways the IPFA Program could be incorporated into their regular marketing and educational programs.
Q: What types of nonprofits qualify for this program?
A: Any legitimate nonprofit would qualify. This would include, hospitals, schools, charities, religious organizations, foundations and associations.
Q: Does this program impact a nonprofit’s tax status?
A: No, the money received is a donation to the nonprofit.
NOTE: Nothing contained herein is, or should be construed as, legal, tax, or accounting advice. The information provided was written to clarify certain aspects of the program and we highly recommend that clients should always consult with their independent professional advisors to seek advice on the applicability of this information to their specific circumstances.