Gift Tax Problem Solved

Mr. and Mrs. Hall are working with an estate attorney. They have a life insurance need and the ability to pay the premium but have limited ability to make gifts to a trust. They would like to secure life insurance coverage but do not want to pay gift taxes. The attorney determined the amount needed, and the task was to figure out how to pay for it.

Financing life insurance premiums is a gift tax efficient method of getting assets into an irrevocable life insurance trust (ILIT) to pay life insurance premiums. Premium financing involves the trustees of an ILIT to enter into a financing arrangement with either commercial lenders or with the grantors of the ILIT. This concept is especially useful in situations where the cost of the life insurance premium exceeds the gifting ability. Leveraging the loan interest and the donor's gifting ability usually allows large life insurance premiums to be paid at a fraction of the gift tax cost.

The Solution

Female, age 54 Issued Preferred Non-smoker

Male, age 54, Issued Preferred Non-smoker               

Policy #1:

• $2.5m death benefit with Chronic Illness Rider, the Family Insurance Trust is the owner and beneficiary
• Survivorship Indexed Universal Life Policy
• $21,000 annual premium

Policy #2:

• $7.5m death benefit with a Chronic Illness Rider; his personal ILIT is the owner and beneficiary
• Indexed Universal Life Policy
• $138,000 annual premium

First Year Target Premium for Both: $104,000 and $55,000 in excess premium

Affordable Life Insurance is Possible after Breast Cancer Diagnosis

Your clients who have a history of breast cancer are eligible to qualify for affordable life insurance rates because more carriers consider an applicant's full medical history for the best possible rating. Since the advancements in treatment, underwriters have loosened the reigns for more favorable life insurance coverage.

According to the Susan G. Komen website, breast cancer mortality has declined by 39%, yet 266,120 new cases of breast cancer (for women and 2,550 for men) will be diagnosed this year. Insurance companies will look at the entire breast cancer history (including pathology reports), and some will be more favorable than others. That's where working with MVP Financial can help...

Underwriting the mortality risk for breast cancer varies with the stage of the cancer. Non-invasive cancer has a better diagnosis than invasive tumors. Tumor size is an independent foretelling factor and each involved lymph node worsens the prognosis. Lifelong follow-up is required by the patient to detect relapses, which can occur decades after the initial diagnosis. Good and consistent medical follow up by your client will provide the full picture and is extremely important to the underwriting process.

To get started with the underwriting process, use this Breast Cancer Questionnaire from NAILBA for your clients that have been diagnosed with breast cancer and contact MVP Financial.

~There is never a guarantee of insurability and every case is handled individually.