PREMIUMFINANCED

LIFE INSURANCE

A DISCUSSION ABOUT

1200 Brickell AvenueSuite 1270Miami, FL 33131

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PREMIUM FINANCE OVERVIEWPremium Financing is a strategy whereby a qualified borrower accesses 3rd party financing to pay for large life insurance premiums. Individuals and business can now obtain their desired amounts of coverage with minimal initial cash flow. The insurance loan is provided by large banks and institutions dedicated to meeting and serving the needs of the high net worth and ultra-high net worth.

Premium Financing is widely accepted by the insurance companies and is reserved for qualified clients. Vérité’s expertise will help you navigate through this process and determine the appropriate insurance company and the best insurance design to maximize the plan and meet your objectives. The insurance companies have constructed products that are tailored for these financed plans to minimize outside collateral and maximize returns.

Vérité has been dedicated to the Premium Financing market since 2009. We have a deep knowledge of the life insurance space with over 50 years of combined experience on the team. This insurance knowledge coupled with our deep lending relationships allows us to offer a turnkey approach with a suite of banks to meet each qualified client’s goals. Our dedication to this market and our track record has made us a preferred provider for many major insurance companies.

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TAILOREDPLAN

No two premium finance plans are the same and each plan is custom designed to the needs of the borrower. Several things will be considered and discussed before finalizing the plan, insurance company, and bank. Such as:

What is the client’s net worth, liquidity and income?

Is the borrower prepared to pay interest? Accrue interest? A combination of the two?

Where will the interest come from?

Is the loan going to be short term (1-3 years)? Long term? For life?

Is the client willing to create a relationship with the lending bank in addition to the premium finance loan?

What is the exit strategy?

How concerned is the borrower with interest rate risk?

What is the current liquidity and short term projected liquidity to manage loan collateral?

What is the most suitable asset to pledge as collateral? (Typically real estate is not an option).

Are there considerations around a personal guarantee?

What individual or entity should own the life insurance?

What insurance company coincides best with the client’s profile?

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PARTIES TO THE TRANSACTIONThe individual or entity being financially underwritten to qualify for the loan facility (individual, trust, corporation, LLC, non-profit);

GUARANTOR:The individual or entity providing a personal or corporate guarantee for the loan. This can be waived for qualified borrowers and will be permitted by some banks;

INSURED:Individual(s) being underwritten for the insurance;

INSURANCE CARRIER:The life insurance company issuing the policy to be financed;

POLICY OWNER:Person or entity that will own the life insurance policy that is being financed;

BENEFICIARY:Person or entity that will receive the death benefit proceeds after repayment of any outstanding principal or interest on the loan;

BANK/LENDER:The institution committing to funding the life insurance.

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COMPONENTSOF THE LOANAMOUNT:The initial funds dispersed at closing;

TERM / FACILITY:Initial loan facility from 1-10 years with renewals;

RATE:Prime or Libor based with a spread. Most interest rates are variable but fixed rates are available. Typically designed with either full interest payment or a designated cash flow.

COLLATERAL:Loans must be 100% secured at all times. The primary collateral is the insurance policy(s) and its Cash Surrender Value (CSV) at a 90-100% advance rate. The borrower often has to pledge additional assets to secure any shortfall between the end of year loan and the CSV. These assets include but are not limited to other insurance CSV, Letter of Credit, cash, and securities.

It is important to understand that unlike interest, which is a true cost, collateral is more of an inconvenience. It involves moving “money” from one bank to another or assigning an asset. As long as there is no default, the “money” remains in the possession of the borrower and in some cases the borrower may even be able to have their investment advisor manage the collateral.

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ABOUT THE BANKSThere are essentially two types of banks; the first we call “non-relationship” banks and their only mission is to make loans and earn interest and fees (if applicable). Typically they have higher interest rates but are more flexible with collateral and will often give 100% credit to Cash Surrender Value (CSV) for collateral.

We refer to the second type as “relationship” banks. They have an interest in making loans for high net worth borrowers, primarily as a means to ingratiate themselves with said borrower / family. They require a depository / investment relationship up front, typically starting at $1,000,000 +. A meaningful relationship will result in better pricing than the “non-relationship” banks can offer.

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FROM THEBANKER’S VIEWPOINT

When Vérité submits to the banks it is important to be cognizant of what they look for. The financial underwriting that the bank performs is different than the underwriting process and qualification required by the insurance companies. Approval of a $10,000,000 policy with carrier XYZ in no way guarantees approval of the $1,000,000 loan to fund that policy. We have found that ALL banks evaluate 5 main criteria.

These are provided as general guidelines:

NET WORTH | The insured or guarantor must have a net worth of at least $5,000,000.

COLLATERAL | Where will the collateral come from to secure the initial shortfall, if one exists? More importantly, does your balance sheet show the ability to manage the future collateral needs of the plan?

LIQUIDITY | Liquidity is a measure of the client’s ability to post the required collateral and easily access the funds to pay-off the loan if needed. Regardless of the cash value, banks want to see some amount of outside liquidity. As a rule of thumb, it is easier to secure financing for a borrower with a $20,000,000 net worth and $5,000,000 of liquidity than one with $50,000,000 of net worth and $1,000,000 of liquidity

INCOME | Is the income sufficient to service the loan in addition to the borrower’s current expenses and liabilities (mortgage, business debts, alimony, etc.)?

EXIT STRATEGY | How will the loan be paid back? There are three (3) primary exit strategies:

– The CSV can be used in part or in total to repay the loan;

– The borrower has a planned “event” in which cash is created to repay the loan. An example of this would be the sale of a business;

– Elder insured can plan for the death benefit to repay the loan.

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IDEAL CLIENTBY INDUSTRY

IDEAL CLIENT SHOULD POSSESS– A net worth in excess of $5,000,000, but typical is $20,000,000+;

– A legitimate life insurance need for estate planning, asset class purchase, corporate buy/sell, key person insurance, charitable planning, and tax-free cash value accumulation, etc.;

– An understanding of leverage;

– A desire not to liquidate assets/investments to pay life insurance premiums;

– A concern about potential gift taxes;

– A willingness to have “skin in the game” either through the pledging of acceptable collateral and/or the payment of loan interest.

– Real estate owners, developers, and managers;

– Privately held business owners;

– Multifamily offices;

– Corporate executives;

– Hedge fund owners and managers;

– Private equity investors;

– Physicians;

– Successful professional advisors.

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ADVANTAGES

CONSIDERATION / RISKS

– Reduce or eliminate the out-of-pocket cost for life insurance;

– Take advantage of an insurance company’s crediting rate that may outperform the borrowing costs;

– Opportunity for moneys saved by not paying the premiums to outperform the borrowing cost;

– Given a set cash flow, an opportunity may exist to purchase more life insurance than if the client just pays the premium;

– Added flexibility to life insurance planning through cash flow flexibility;

– Reduce or eliminate gift taxes.

Premium finance is a complex strategy involving several risks:

Interest Rate | the risk that the loan rate may grow higher and faster than anticipated (fixed rates and hedging options are available to mitigate this risk);

Collateral | the collateral that the borrower posts in addition to the insurance policy is at risk if the loan is called and is unable to be repaid or refinanced;

Policy Performance | the risk that policy will not perform as projected and the cash value will be lower than expected;

Renewal | the possibility that the bank will not extend financing beyond the initial commitment;

Change in Financial Condition | a severe adverse change in the borrower’s financials could cause the bank to call the loan if covenants are broken.

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INSURANCE POLICY OPTIONS / DESIGNSAs long as the insurance company is highly rated (A) or better, Vérité can finance just about any permanent cash value policy. This includes;

– Whole life

– Universal life

– Index universal life

Each of our premium finance loans is specifically designed in accordance with the client’s desires. While our designs are flexible, we always present designs we feel are realistic. We will NOT submit designs that we feel are not achievable or are egregious in terms of their projections.

The most common funding design is maximum Non-MEC funding for 10 years or less. We can illustrate paying interest, accruing interest or some combination to be determined. We illustrate an initial rate we believe to be realistic

based on the client’s financials, policy size, and the bank we intend to approach for financing. The interest rates are then projected based on historical Prime and Libor rates.

The design process is an art, not a science. We start with an insurance illustration. From that we develop the first loan illustration. We review and discuss with the advisor and then repeat the process again and again until we get to a place that is appropriate for presentation to the client.

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PREMIUM FINANCE CHECKLIST FOR

SUBMISSIONThe following items are required to receive a term sheet:

ILIT TRUST / INDIVIDUAL BORROWER– Personal Financial Statement (PFS) - within 6 months – Bank statements to verify cash and security positions listed on PFS– Last 2 years tax returns, including schedules (K1, etc)– Copy of ILIT or other ownership document– Life Insurance illustration to be financed (If using Indexed UL, please illustrate

at – Insurance Carrier’s guaranteed minimum crediting.)

CORPORATE SPONSORED– 2 years of Corporate Financial Statements (Balance Sheet / Profit & Loss / Cash Flow)– 2 years Corporate Tax Returns– Company organizational chart including lists of officers and directors

The following additional items may be required to close:– Real estate schedule including recent appraisals if available – Rent rolls– Schedules of Account Receivables, Account Payables, and Inventory– Articles of Incorporation and bylaws– Other items that may be requested on a case by case basis

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ABOUT VÉRITÉ

Vérité Group is a boutique insurance advisory firm focused on meeting the complex insurance needs of the high net worth. We’re driven by certain core values that serve as the cornerstone of our business and our never-ending commitment to a client-first mentality.

INTEGRITY | Your Interests FirstWe pride ourselves on a client-first mentality providing agnostic advice that best serves your client, not us.

RESPONSIVE | We Stand ReadyOur clients receive expeditious response time to help them work and compete in this desirable market.

RELIABLE | Place Your Trust In Us We stand behind our product and design. Everything that leaves our office is thoroughly reviewed and thought out.

EXCLUSIVE | We Partner Only With Those Who Share Our Same Client FocusWe choose to partner only with firms that share our values and strive for the same level of excellence that we do.

DETAILED | We Embrace The DetailsThe complex transactions are all about the details, not about the sales presentation. Our dedication to this will have you on solid ground with the clients that you serve. The high net worth community demands accuracy and expertise and we deliver.

INTEGRITYYOUR INTERESTS

FIRST ALWAYS

RESPONSIVEWE STAND READY

AT ALL TIMES

RELIABLEPLACE YOUR TRUST

IN US

EXCLUSIVEPARTNERS WHO

SHARE OUR VALUES

DETAILEDWE EMBRACETHE DETAILS

HOW WE CAN HELP

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Michael is a founding member of Vérité Group, LLC and brings 40 years of life insurance experience to the firm. He focuses on expanding Vérité’s brand in the financial services industry and fulfilling its value proposition to its advisors and clients.

Michael’s career has been spent serving the insurance needs of high net worth executives, entertainers, and athletes. He has worked closely with several large and boutique accounting firms to manage the insurance needs of its clients and owners. Prior to Vérité, Michael was a co-founder/principal in a boutique investment bank focused on private placement life insurance. Michael frequently speaks at industry and carrier sponsored events and has been a guest on several radio shows speaking on varied life insurance topics.

He is a Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), a member of the Association of Advanced Life Underwriting (AALU), and a member of the Forum 400. Michael lives in Miami with his wife, Iris, and their three dogs. He loves to travel, play golf, read, and spend time with his family, most of all his grandchildren.

MICHAEL S. SELTZER, CLU, CHFCOUR TEAM

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Nick is the Director of Relationship Management of Vérité Group, LLC. He joined the firm in 2016, and along with Michael Seltzer they specialize in premium finance and meeting the insurance needs of the affluent and high net worth.

Nick’s role within the firm focuses on plan design, advisor education, and point of sale support. His expertise has made him a key facilitator of decision making and a trusted resource for many in the industry. His mission is to create raving fans and provide bespoke service for each individual he works with.

Prior to joining Vérité, Nick was the Director of Planning at Northeast Private Client Group in Roseland, NJ. He is a Masters in Personal Financial Planning (MSPFP) and Certified Financial Planner (CFP®) candidate at Texas Tech University, where he also studies Advanced Charitable Planning and teaches Insurance and Risk Management. He is currently a member of the Association for Advanced Life Underwriting (AALU) in Washington, D.C. and a Board Member of the Lubbock, TX Society of Financial Service Professionals. He enjoys traveling, Brazilian Jiu Jitsu, cooking, skeet shooting, and volunteering.

NICHOLAS T. BOWMANOUR TEAM

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As Director of Premium Finance for Vérité, Cathy oversees banking relationships for the firm, and is responsible for loan structuring, underwriting, and implementation. Her experience and extensive knowledge in these areas make her a truly invaluable resource for Vérité’s clients.

Cathy brings over 15 years of finance expertise to Vérité. Her most recent position was as the Assistant Vice President of Operations at FIRST Insurance Funding Corp, the largest Premium Finance lender in the country. Prior to that she was Assistant Vice President at Wachovia Bank for over 5 years.

In May of 2016, Cathy welcomed her first child, Anthony James. She loves to travel and returns to her native Italy as often as she can to visit her family.

Joe Bolanos joined Vérité Group in November of 2016. Joe brings an extensive background in life insurance: Case design, Medical underwriting and Case/Loan processing.

Joe is instrumental in assisting financial advisors and insurance agents in navigating the complex world of premium funding life insurance. Providing guidance on products and carrier selection. Joe’s past positions include management roles for national Independent Marketing Organizations and lead medical/financial underwriting for one of the largest premium finance TPA’s in the marketplace.

Joe began his career with State Farm in 1990 and currently resides in Aliso Viejo, CA. In his free time, Joe enjoys bicycling, hiking and mixing music.

CATERINA DESTITO

JOSEPH BOLANOS

OUR TEAM

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OUR PROCESS

DISCOVEREXPLORE CASE

DETAILS

DESIGN

SUBMIT

CLOSEFUND

MANAGE

CUSTOMIZEDARCHITECTURE

LENDER SUBMISSIONDOCUMENT PREP

CLOSE THE TRANSACTION

FACILITATE PREMIUM PAYMENT

ONGOINGANALYSIS

Process

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OUR PROCESSCONT.

DISCOVER | EXPLORE CASE DETAILSInitial share of information between Vérité and the advisor/client. Primary focus is on insurance needs and borrowers’ financial commitment. It also includes life insurance illustrations to be financed and discussion regarding borrowers’ financials.

DESIGN | CUSTOMIZED ARCHITECTUREVérité will create a customized Premium Finance design to meet the clients’ goals. This stage is often a “back and forth” between Vérité and the referring advisor. We will suggest products that allow for the highest probability of success.

SUBMIT | LENDER SUBMISSION DOCUMENT PREPARATIONBorrower to provide necessary documents/financials to form a complete package. Vérité will obtain term sheet(s) and upon review, negotiation, and acceptance, will proceed to formal approval.

CLOSE | CLOSE THE TRANSACTIONEither in person, phone, and/or WebEx, we will be present throughout to ensure a smooth closing and document signing. The closing package is inclusive of applications, documents, designs and stress testing.

FUND | FACILITATE PREMIUM PAYMENTFollowing receipt of signed and notarized documents, pledged collateral (if needed), and receipt of interest (if required), the bank will send a wire to the insurance carrier for the premium.

MANAGE | ONGOING ANALYSISVérité has an annual process to ensure a successful renewal. This is not “set it and forget it.” We evaluate both the insurance performance and the lending terms on an ongoing basis.

60 days prior to the renewal of the loan, we will reach out to the agent/client and advise of the upcoming renewal. We want to ensure that the renewal process is a successful and smooth one. In addition, the premium finance illustration is updated annually to evaluate both policy and loan performance in comparison the prior year(s).

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CLIENT

Approximate Net Worth: ______________________________________________________________________________

Insured 1: ______________________________________________________________________________

Date of Birth: ______________________________________________________________________________

Underwriting Class: ______________________________________________________________________________

State: ______________________________________________________________________________

Insured 2: ______________________________________________________________________________

Date of Birth: ______________________________________________________________________________

Underwriting Class: ______________________________________________________________________________

PRODUCT DESIGN

New or Existing Coverage: ______________________________________________________________________________

Amount: ______________________________________________________________________________

Carrier Preference: ______________________________________________________________________________

Product Type: ______________________________________________________________________________

FINANCE DESIGN

Maximum Cash Flow: ___________________________________________________________________

Maximum Collateral Tolerance: ___________________________________________________________________

Loan Repayment (Policy/Outside Funds): ___________________________________________________________________

Do You Have a Non-Financed Alternative?: ___________________________________________________________________

NOTES

CASE DESIGN

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CLIENT

Approximate Net Worth: ______________________________________________________________________________

Insured 1: ______________________________________________________________________________

Date of Birth: ______________________________________________________________________________

Underwriting Class: ______________________________________________________________________________

State: ______________________________________________________________________________

Insured 2: ______________________________________________________________________________

Date of Birth: ______________________________________________________________________________

Underwriting Class: ______________________________________________________________________________

PRODUCT DESIGN

New or Existing Coverage: ______________________________________________________________________________

Amount: ______________________________________________________________________________

Carrier Preference: ______________________________________________________________________________

Product Type: ______________________________________________________________________________

FINANCE DESIGN

Maximum Cash Flow: ___________________________________________________________________

Maximum Collateral Tolerance: ___________________________________________________________________

Loan Repayment (Policy/Outside Funds): ___________________________________________________________________

Do You Have a Non-Financed Alternative?: ___________________________________________________________________

NOTES

CASE DESIGN

1200 Brickell AvenueSuite 1270Miami, FL 33131