Loan Underwriting Process USB
  (for $1MM+ Annual Premiums)

Step 1:  Begin Policy Application Process


1. Agent downloads and fills out Lionsmark Universal Application (Excel document that can be downloaded by clicking HERE).  

2. Agent uploads the Lionsmark Universal Application on the same web portal as above.


3. Agent sets up paramed exam for client (unless agent requests Lionsmark to set this up)


4. Lionsmark will transcribe data onto the carrier application (initially individually-owned)


5. Lionsmark will circulate the carrier application to be signed by agent and client (you do not need to have your client sign because we handle that for you):

       *(for carriers that allow e-signatures, and for carriers that do not, PDFs will be emailed for wet signatures)


Step 2:  Begin Loan Underwriting Process 


1. Immediately after the client signs/DocuSigns the policy application, the Agent uploads the lender-required financials (CLICK HERE to see the list of lender-required documents at our secure document upload portal).


2. Lionsmark begins lender underwriting with Lender.

  • Policy ownership and borrower may either be an entity (e.g., S-Corp, LLC, Trust, ILIT) or an individual (e.g., The Insured Person)

  • Lender determines the required collateral amount based on financials, as well as the type of collateral accepted (Lionsmark will notify the agent and client once determined).

  • Lender issues a term sheet once loan underwriting is approved

Terms specific to this particular lender:

  • Lender outsources the loan document drafting to a third party law firm.  Because there are no origination fees with Lender, this loan document fee is bundled into the loan.  This fee is $5,500 for year one, and $2,500 per year up until the loan is paid off.  This fee is specific to this particular lender.  Other lenders may charge a loan origination fee, whereas others will charge an additional spread on new money, and some will not charge any origination fees whatsoever (thought their borrowing rates tend to be higher).  Some lenders will have a minimum floor on the total loan rate, whereas some lenders will have a floor on Libor, and some will have neither.  Every lending platform may have different loan arrangements, even within the same lender.  It is Lionsmark's job to find the most appropriate lender and loan terms that fits the client's needs and preferences.

  • Lender requires collateral assets to be moved to Lender as the custodian, but does not charge AUM fees on such funds.  In many cases, the funds that the client currently has assets in can remain in the same funds despite moving them to Lender.  Such approval is granted on a case by case basis and is subject to loan underwriting approval.

3. Lionsmark submits Lender term sheet to carrier.

Step 3:  Carrier Formal Approval & Policy Delivery


1. Client transfers collateral to Lender (a Lender requirement).  Lender does not charge an AUM fee to house such funds.  In most cases, the client may use the same investment funds they previously had such funds invested in.


2. Client signs policy delivery docs.

3. Lender funds the first-year premium once collateral is verified.


Step 4:  End of Fiscal Year - Interest Payment Due

1. Lender calculates the average 30-day floating Libor rate over the last 360 days, adds their spread to Libor, and produces a loan rate.  Such loan rate is applied to the cumulative loan balance, calculating the interest due.

2. Client pays the interest payment to Lender.

Step 5:  Annual Renewal Process

1. Agent uploads client's updated documents 90 days prior to the loan renewal date:

  • Last year's tax return

  • Personal Financial Statement (PFS)

  • Verification of Liquidity Statements

  • In-force Illustration


2. Lender will then re-underwrite the loan each year and fund the premium amount to the carrier.


Step 6:  Loan Payoff


1. Per the Agent's analysis and the client's agreement, the client may payoff the loan using either policy values (assuming policy values allow), or by using external funds.


2. There is no pre-payment penalty should the borrower decide to exit the loan after the loan term (e.g., 1-Year, 3-Years, 5-Years).