Situation:
- Client is a business owner that would like to leverage business assets to create additional resources for retirement or to contribute to a legacy for his/her family
- Client is concerned about protecting business assets from creditors
Solution:
Accounts receivable financing is a technique for funding life insurance premiums for small business owners. A/R financing is essentially premium financing that uses a business owner’s accounts receivable as collateral for the loan.
Benefits:
- Tool for business owners to take advantage of an otherwise non-performing asset
- Can provide death benefit for family legacy
- Can be an additional source of retirement income that allows tax-deferred growth, and permits tax-free distributions (provided contract is not a MEC and they use a combination of withdrawals up to policy basis and taking loans thereafter)
- Discourages creditors from trying to reach this asset, since they are 2nd in line