Interest Accrual (PEIA)
Premium Financing


In this program, we use a 10-pay design.  In years 1-10, the client pays 10%-20% of the actual premium (a fixed annual budget that fits within the client's budget).  The remaining 80%-90% of policy premium is financed, and the interest is accrued.  This is not a “free insurance program,” for the client is paying 10%-20% of the annual premium out-of-pocket via the fixed annual budget.


There will always be an outside collateral requirement in this program, and the client is required to sign a personal guaranty on the loan.  Different lenders on our platform (we currently have 14) will require different forms of collateral (cash, bonds, marketable securities, CDs, cash value of in-force policies, and sometimes even real estate equity).  Some lenders will require collateral to be moved and housed with them, and other lenders will simply take a collateral assignment against the funds house by the current institution that manages the client's portfolio. 

It is important to note that not all carriers will allow this type of design due to interest accrual, however the interest accrued in this model is not over-leveraged due to the fact that the amount of premium paid out-of-pocket by the client is much greater than the interest due/accrued in the early years.  This design is not suited for a client who "can't afford" to pay the interest due, rather it is for a client that prefers the simplicity of a fixed annual payment and doesn't mind the risk of potential negative arbitrage in some years.



To watch a video of Darren Sugiyama reviewing an actual case study, click on the type of solution you are looking for below:

© 2021 by Lionsmark Capital, LLC