ACA - Intro to Premium Financing

A Fresh Approach to Life Insurance

Not intended for the public. For producer use only.

A FRESH APPROACH to wealth transfer and retirement planning

No need to liquidate assets to pay life insurance premiums

Not intended for the public. For producer use only.

How do we buy things? Two Ways:

• Pay CASH out-of-pocket-or-

• Borrow money to pay for goods & services

Not intended for the public. For producer use only.

The Rancho Santa Fe Example How do we BUY?

• Pay CASH out-of-pocket-OR-

• Finance the purchase

If we took away the OPTION to finance, who would BUY?

Not intended for the public. For producer use only.

The Rancho Santa Fe Example:◦ $2,000,000 purchase price

Year Cash Option

Financed Alternative @ 3%

Interest Retained CapitalRetained Capital Account @ 5%

1 $2,000,000 $60,000 $1,940,000 $2,037,000

2 $60,000 $1,880,000 $2,138,850

3 $60,000 $1,820,000 $2,245,793

4 $60,000 $1,760,000 $2,358,082

5 $60,000 $1,700,000 $2,475,986

6 $60,000 $1,640,000 $2,599,786

7 $60,000 $1,580,000 $2,729,775

8 $60,000 $1,520,000 $2,866,264

9 $60,000 $1,460,000 $3,009,577

10 $60,000 $1,400,000 $3,160,056

Not intended for the public. For producer use only.

Which would you rather do????

Not intended for the public. For producer use only.

◦ Can we approach life insurance in a similar way?

Not intended for the public. For producer use only.

Why do we buy life insurance? • Cash accumulation potential• Death benefit potential• Combination of both

Not intended for the public. For producer use only.

Did you know? • 80% of life insurance policies never pay a death claim

Top 3 Reasons:• Term policies lapse• Cash value policies are surrendered• Policies are NOT properly funded

Not intended for the public. For producer use only.

What does that mean? • 80% discount on life insurance

Not intended for the public. For producer use only.

How can we WIN? • Properly fund a life insurance policy from the beginning

What are the two ways to do so? • Pay CASH • Borrow Funds

Not intended for the public. For producer use only.

LEVERAGE• Leverage a lender’s capital• Retain use of your own capital for investment opportunities

Not intended for the public. For producer use only.

Not intended for the public. For producer use only.

Two Main Strategies• ACA Legacy Strategy• ACA Retire Strategy Three Levels of Engagement• Exclusive Program• Elite Program• Concierge Program

Not intended for the public. For producer use only.

ACA Retire Strategy Client Profile◦ Age 29 to 55◦ Net worth $5,000,000 or greater◦ Strong cash flow◦ Strong credit◦ Standard health or better

Option for substandard risks

Not intended for the public. For producer use only.

ACA Retire Strategy Benefits◦ Tax-Free Retirement◦ Leveraged life insurance benefit◦ Retained Capital

Not intended for the public. For producer use only.

ACA Retire Strategy How it works• Pay premiums with borrowed funds• Retain use of your own assets• Repay lender from policy proceeds

Not intended for the public. For producer use only.

  S&P 500 Performance 5.33% Borrowing Rate 3.00%    

    Premium Beginning Ending Annual Annual Surrender Collateral Death Retained Retained

Year Age Outlay Loan Balance Loan Balance Interest Out-of-Pocket Value Required Benefit Capital Capital @ 5%

1 39 $369,203 $369,203 $369,203 $11,076 $11,076 $92,857 $276,346 $11,000,000 $358,127 $376,033

2 40 $369,203 $738,406 $736,558 $22,152 $24,000 $459,166 $277,392 $11,000,000 $345,203 $757,298

3 41 $369,203 $1,105,761 $1,114,934 $33,173 $24,000 $854,697 $260,237 $11,000,000 $345,203 $1,157,626

4 42 $369,203 $1,484,137 $1,504,661 $44,524 $24,000 $1,281,746 $222,915 $11,000,000 $345,203 $1,577,971

5 43 $369,203 $1,873,864 $1,906,080 $56,216 $24,000 $1,742,816 $163,264 $11,000,000 $345,203 $2,019,332

6 44 $- $1,906,080 $1,939,262 $57,182 $24,000 $1,912,929 $26,333 $11,000,000 $(24,000) $2,095,099

7 45 $- $1,939,262 $1,973,440 $58,178 $24,000 $2,092,287 $- $11,000,000 $(24,000) $2,174,654

8 46 $- $1,973,440 $2,008,644 $59,203 $24,000 $2,281,561 $- $11,000,000 $(24,000) $2,258,187

9 47 $- $2,008,644 $2,044,903 $60,259 $24,000 $2,481,457 $- $11,000,000 $(24,000) $2,345,896

10 48 $- $2,044,903 $2,082,250 $61,347 $24,000 $2,692,775 $- $11,000,000 $(24,000) $2,437,991

11 49 $- $2,082,250 $2,120,717 $62,467 $24,000 $2,913,431 $- $11,000,000 $(24,000) $2,534,690

12 50 $- $2,120,717 $2,160,339 $63,622 $24,000 $940,267 $- $8,787,357 $(24,000) $2,636,225

Tax-Free Retirement  

22 60 $- $- $- $- -$300,000 $3,187,317 $- $12,422,043 $- $2,768,036 23 61 $- $- $- $- -$309,000 $3,264,230 $- $12,751,865 $- $2,906,438

24 62 $- $- $- $- -$318,270 $3,354,200 $- $13,094,817 $- $3,051,760

25 63 $- $- $- $- -$327,818 $3,459,065 $- $13,451,264 $- $3,204,348

26 64 $- $- $- $- -$337,653 $3,580,696 $- $13,822,052 $- $3,364,565

27 65 $- $- $- $- -$347,782 $3,721,107 $- $14,208,338 $- $3,532,793

28 66 $- $- $- $- -$358,216 $3,882,706 $- $14,611,857 $- $3,709,433

29 67 $- $- $- $- -$368,962 $4,067,980 $- $15,034,002 $- $3,894,904

30 68 $- $- $- $- -$380,031 $4,279,539 $- $15,476,549 $- $4,089,650

31 69 $- $- $- $- -$391,432 $4,520,315 $- $15,941,160 $- $4,294,132

32 70 $- $- $- $- -$403,175 $4,793,395 $- $16,429,631 $- $4,508,839

Not intended for the public. For producer use only.

ACA Retire Strategy Exit Strategy◦ From policy proceeds in 12th year

Not intended for the public. For producer use only.

ACA Retire Strategy Retained Capital◦ Retain use of your own assets for other investment opportunities

◦ $1,566,139 in this example

Not intended for the public. For producer use only.

ACA Retire Strategy Tax-Free Retirement◦ Client can realize tax-free retirement

◦ $300,000 per year + inflation protection

Not intended for the public. For producer use only.

ACA Retire Strategy Loan Options◦ Fixed rate & Floating Rate◦ As low as 2.5%◦ Option to raise capital upfront for future years

◦ Potential to defer one or more interest payments

Not intended for the public. For producer use only.

ACA Legacy Strategy Client Profile◦ Age 60 to 85◦ Net worth $5,000,000 or greater◦ Strong credit◦ Standard medical rating or better

Option for substandard risks

Not intended for the public. For producer use only.

ACA Legacy Strategy Benefits◦ Leveraged life insurance benefit◦ Retain use of your own assets◦ Maximize legacy while minimizing opportunity costs

Not intended for the public. For producer use only.

ACA Legacy Strategy How it works• Pay premiums with borrowed funds• Retain use of your own assets• Repay lender from death benefit

Not intended for the public. For producer use only.

  S&P 500 Performance 5.33% Borrowing Rate 3.00%      

    Premium Beginning Ending Annual Annual Surrender Collateral Death Net Death Retained Retained

Year Age Outlay Loan Balance Loan Balance Interest Out-of-Pocket Value Required Benefit Benefit Capital Capital @ 5%

1 67 $964,206 $964,206 $964,206 $28,926 $28,926 $340,704 $623,502 $10,964,206 $10,000,000 $935,280 $982,044

2 68 $964,206 $1,928,412 $1,938,264 $57,852 $48,000 $1,207,350 $730,914 $11,928,412 $9,990,148 $916,206 $1,993,162

3 69 $964,206 $2,902,470 $2,917,544 $87,074 $72,000 $2,127,693 $789,851 $12,892,618 $9,975,074 $892,206 $3,029,637

4 70 $964,206 $3,881,750 $3,890,203 $116,453 $108,000 $3,104,043 $786,160 $13,856,824 $9,966,621 $856,206 $4,080,135

5 71 $964,206 $4,854,409 $4,892,041 $145,632 $108,000 $4,146,289 $745,752 $14,821,030 $9,928,989 $856,206 $5,183,158

6 72 $964,206 $5,856,247 $5,923,935 $175,687 $108,000 $5,331,007 $592,928 $15,785,236 $9,861,301 $856,206 $6,341,332

7 73 $964,206 $6,888,141 $6,986,785 $206,644 $108,000 $6,587,332 $399,453 $16,749,441 $9,762,656 $856,206 $7,557,415

8 74 $- $6,986,785 $7,088,388 $209,604 $108,000 $6,936,673 $151,715 $16,749,441 $9,661,053 $(108,000) $7,821,886

9 75 $- $7,088,388 $7,193,040 $212,652 $108,000 $7,289,735 $- $16,749,441 $9,556,401 $(108,000) $8,099,580

10 76 $- $7,193,040 $7,300,831 $215,791 $108,000 $7,646,174 $- $16,749,441 $9,448,610 $(108,000) $8,391,159

11 77 $- $7,300,831 $7,411,856 $219,025 $108,000 $8,006,663 $- $16,749,441 $9,337,585 $(108,000) $8,697,317

12 78 $- $7,411,856 $7,526,212 $222,356 $108,000 $8,381,037 $- $16,749,441 $9,223,229 $(108,000) $9,018,783

13 79 $- $7,526,212 $7,643,998 $225,786 $108,000 $8,768,385 $- $16,749,441 $9,105,443 $(108,000) $9,356,322

14 80 $- $7,643,998 $7,765,318 $229,320 $108,000 $9,169,657 $- $16,749,441 $8,984,123 $(108,000) $9,710,738

15 81 $- $7,765,318 $7,890,278 $232,960 $108,000 $9,584,658 $- $16,749,441 $8,859,163 $(108,000) $10,082,875

16 82 $- $7,890,278 $8,018,986 $236,708 $108,000 $10,016,831 $- $16,749,441 $8,730,455 $(108,000) $10,473,619

17 83 $- $8,018,986 $8,151,556 $240,570 $108,000 $10,469,173 $- $16,749,441 $8,597,885 $(108,000) $10,883,900

18 84 $- $8,151,556 $8,288,102 $244,547 $108,000 $10,944,468 $- $16,749,441 $8,461,339 $(108,000) $11,314,695

19 85 $- $8,288,102 $8,428,745 $248,643 $108,000 $11,447,003 $- $16,749,441 $8,320,696 $(108,000) $11,767,029

20 86 $- $8,428,745 $8,573,608 $252,862 $108,000 $11,982,869 $- $16,749,441 $8,175,833 $(108,000) $12,241,981

21 87 $- $8,573,608 $8,722,816 $257,208 $108,000 $12,561,144 $- $16,749,441 $8,026,625 $(108,000) $12,740,680

22 88 $- $8,722,816 $8,876,501 $261,684 $108,000 $13,194,762 $- $16,749,441 $7,872,940 $(108,000) $13,264,314

Not intended for the public. For producer use only.

ACA Legacy Strategy Exit Strategy◦ From death benefit proceeds◦ Lender repaid and remainder to beneficiaries

Not intended for the public. For producer use only.

ACA Legacy Strategy Retained Capital◦ Retain use of your own assets for other investment opportunities

◦ $4,548,156 in this example

Not intended for the public. For producer use only.

ACA Legacy Strategy Loan Options◦ Fixed rate & Floating Rate◦ As low as 2.5%◦ Option to raise capital upfront for future years

◦ Potential to defer one or more interest payments

Not intended for the public. For producer use only.

ACA Legacy Strategy Benefits◦ Leveraged life insurance benefit◦ Retain use of your own assets◦ Maximize legacy while minimizing opportunity costs

Not intended for the public. For producer use only.

1. Exclusive Program◦ ACA structures case design◦ ACA structures financing◦ ACA reviews plan on annual basis

2. Elite Program◦ ACA structures case design◦ ACA structures financing◦ ACA reviews plan on annual basis◦ ACA presents in webinar

1. Concierge Program◦ ACA structures case design◦ ACA structures financing◦ ACA reviews plan on annual basis◦ ACA presents and sells plan with advisor

Not intended for the public. For producer use only.

Prospecting◦ Typical client profile

Age 29 to 85 Net worth $3MM or greater The healthier the better Business owners Nonprofits

Not intended for the public. For producer use only.

A different approach to life insurance

Few financial instruments are more misunderstood

Maximize wealth transfer and retirement planning objectives

Not intended for the public. For producer use only.

Leverage a dormant asset Retain use of your assets for your investment opportunities

No need to liquidate assets to pay insurance premiums

Not intended for the public. For producer use only.

Speak with an ACA representative for more information◦ Receive case designs & strategies

(888) 389-PLAN (7526)

info@auroracapitalalliance.com www.AuroraCapitalAlliance.com

Not intended for the public. For producer use only.

The information provided above is a summary for life insurance agents or financial advisors use only, and is not intended for use by any consumer or potential insured or as a full explanation of an Aurora Capital Alliance, Inc. premium finance program nor is the information provided herein part of the loan documents or financing agreement governing the loan. No insurance agent or broker shall be deemed to represent Aurora Capital Alliance, Inc. or any of their respective affiliates. This presentation should not be relied upon by any person or party in making any decision related to any application for, or purchase or financing of any life insurance policy. Any interested person will be required to consult his or her independent legal, tax and financial advisors prior to entering into any premium financing transaction. Aurora Capital Alliance, Inc. and their representatives make no representations or warranties, express or implied, by any of the above statements. All transactions are subject to lender approval, at its own discretion. Terms and conditions of transactions are subject to change at any time.

Not intended for the public. For producer use only.

A Fresh Approach to Life Insurance

Not intended for the public. For producer use only.