The primary purpose of this program is for accumulation and future income drawdowns. It is what we refer to as Responsible Leverage, not a free insurance or a magical income in the clouds type of program.
HOW IT WORKS:
This program incorporates the simplicity of a level, fixed, annual contribution for a period of 10 years, with a third-party loan payoff in year 11. We also have a 10-year fixed borrowing rate option as well, wherein the policy value is the sole collateral, with no additional outside collateral required. When stress-tested in our proprietary software, typically this design would require eight 0% index credits in the first eight years of the policy to trigger an additional outside collateral requirement. As long as the policy has a 95% LTV, the client does not need to sign a personal guaranty on the loan, which can be very appealing to most clients.
WHY IT WORKS:
The client pays the first two years of policy premium out-of-pocket. Borrowing starts in policy year three, however the premium is not 100% financed in years 3-10. We have built an algorithm that calculates how much premium should be borrowed, and how much premium should be paid out-of-pocket by the client. Our proprietary algorithm calculates this ratio to accommodate a fixed client outlay.
For example, if the client annual outlay is $100,000 for 10 years, in years 1-2, that $100,000 pays the entire premium. Then in year 3, some of that $100,000 annual budget will pay the interest on the newly borrowed premium, and some of that $100,000 will pay non-financed policy premium. As time goes on, and more premium is borrowed each year, more of that $100,000 annual budget will be applied to the increasing interest (due to the increasing cumulative loan as more premiums are borrowed), and less of that $100,000 annual budget will go towards non-financed premium.
There is no interest accrued and no early cash value riders in the Omakase program whatsoever. For clients that want simplicity, less variables, and less risk... with:
No outside collateral requirements
No personal guaranty requirements on the loan
No requirement to submit updated financials every year
Fixed borrowing rate for 10 years
Fixed client contributions for 10 years
...the Omakase design is perfect for them.
Watch the video below where we walk through a case study using this platform...