Case Study Details

CHALLENGE:

A real estate development company was comprised of three principal partners with equal equity stakes. All three partners were in the 50-55 age range. They were spending approximately $500,000 annually to fund their Buy-Sell agreement with a death benefit of $5M on each partner. With a current valuation on their business of $45M, the partners knew they were underinsured but did not want to liquidate assets to fund new policies.

SOLUTION:

The partners acquired three new $15M policies using a premium financing strategy which enabled them to put the $500k they were currently spending in annual premiums back into their business.

RESULTS:

The business was able to increase overall life insurance benefits from $15M to $45M while freeing up $500,000 to invest back into the business. The policies will provide tax-free dollars that will be used to purchase the deceased owner’s share of the business while providing the surviving owners with a clearly defined strategy.

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