A Whole New Way of Thinking about - Leveraged Funding
Funding Future Liabilities with OPM (other people's money)
Imagine the ability to fund for a future liability - retirement, death benefits, estate transfer, business succession, employee pension or OPEB liabilities - using OPM (other people's money). IBG-BMC has partnered with NIW to offer The ABIL PlanTM (Asset Backed Insurance Lending) to public and private sector employers as well as individuals.
We do it all the time - we borrow money to purchase houses and cars even though we may have enough money to pay cash. Why? Leverage. We routinely leverage OPM because our own money can be more beneficially deployed in other ways - building businesses, purchasing inventory or providing governmental services. Similarly, using financing to pay for insurance is not a new or unique concept and allows for scarce dollars to be put to their highest and best use for for optimal return.
An ABIL PlanTM transaction is quite simple in design. We have arranged for national and international banks and other lenders to loan money for the purpose of purchasing life insurance policies. These policies are typically, though not always, held in a trust. The policies themselves provide most of the collateral for the loan thus requiring little or no out-of-pocket costs.
With the The ABIL PlanTM interest is usually (but not always) rolled up into the loan thus requiring no annual interest payments. The Plan uses carefully selected insurance products that are designed to grow at a rate faster than the loan. At an appropriate time in the future, generally about 15 years, the policy has enough built up cash value to allow for the loan principle and interest to be paid off while retaining sufficient residual cash value to maintain the policy in place through age 100-120.
"Somewhere, something incredible is waiting to be known."Carl Sagan