Kai-Zen premium financing is a strategy that enables you to supercharge your retirement plan. Kaizen is simply a concept that allows you to finance the premium for your IUL Policy.
In many cases, traditional retirement plans are generally limited and, therefore, insufficient for workers considered to be high-income earners. Earners who set goals to maintain an expected lifestyle during retirement must have a defined and dedicated strategy that ensures more money for protecting their future income without draining their current finances.
We have found that Kai-Zen is an exclusive strategy that utilizes leverage to assist with acquiring the benefits you require to protect you and your loved ones financially. Kai-Zen is a combination of financing and indexed universal life insurance that provides the protection required and the significant potential to increase earnings for retirement that you would otherwise not have access to without this leverage.
How Does Kai-Zen Work?
Kai-Zen is a straightforward strategy. Insurance premiums are mutually funded by bank financing combined with the participant or the participant’s employer. The bank or lender funding is responsible for the majority of the contributions to the plan, and then the life insurance policy is the security for the loan. The Kai-Zen strategy is fashioned so that the participant is never required to undergo financial underwriting or sign documents related to the transaction. Additionally, the Kai-Zen structure is designed to protect your benefits from an employer’s bankruptcy.
Put, Kai-Zen allows you to purchase a very large life insurance policy that has a much larger death benefit, considerably more living benefits, and the ability to build substantial cash accumulation without the usual concerns for market volatility.
Who is Eligible to Use Kai-Zen Premium Financing?
Eligible candidates for Kai-Zen are individuals aged 18 to 60 who are in average or above-average health and earn at least $100,000 annually. Individuals over 60 generally cannot participate in the program because of the program’s financing conditions. In other words, someone who is age 60 or older will not have the time required to accumulate sufficient cash in the insurance policy that is needed to repay the bank loan and continue to have enough cash for retirement or a legitimate death benefit.
Who are the best candidates for Kai-Zen?
Kai-Zen was developed to be an executive bonus life insurance option for well-compensated individuals or groups like law firms, physicians, CPAs, and others who require a proven strategy over and above a traditional 401(k) or IRA that can assist with saving for retirement and achieving their goals for the future. The Kai-Zen strategy is also a viable solution for Key-Person Insurance, Buy-Sell Agreements, and other business continuation strategies.
Is there a Minimum Death Benefit Required?
Generally, the minimum death benefit that will be considered is $1.5 million, but there is no maximum benefit as long as the participant’s annual income, net worth, and in-force insurance justify the face amount applied for.
When Can I Access the Funds for Supplemental Income?
The Kai-Zen premium financing program is generally constructed so that the participant (insured) can begin accessing accumulated funds when they reach retirement age (65 or older). The program is set up, however, for the loan to be repaid in the 15th year, so technically, you will have access to the cash in your policy using tax-free policy loans after the 15th year.
Do I have to Pay Annually, Quarterly, or Monthly?
When the Kai-Zen plan is set up for you, an annual contribution is required upfront. In the future, you can elect to fund your trust on a monthly or quarterly basis as long as the full annual contribution is in your account. The participant can also elect to pay all five required contributions either upfront or in some other manner within those five years.
What is the Primary Benefit of Kai-Zen vs. a Traditional Purchase?
By utilizing a third-party lender for premium financing, Kai-Zen makes it possible for the participant (insured) to buy a policy with a higher death benefit than they would have ordinarily been able to afford. This outside financing also allows the policy to build significant cash value at a greater rate.
Also, since the policy has a much higher death benefit, the living benefits, like the accelerated death benefit, will be much higher as well. The bottom line is the policy’s increased cash value will provide substantial funds for a higher supplemental income after the loan has been paid off.
Is Kai-Zen only for Individuals, or can a Company Take Advantage?
The Kai-Zen third-party premium financing strategy can be sold to individuals or to groups of individuals in a company. This will benefit a company by allowing unrelated workers to obtain third-party financing at a very attractive rate.
For groups of employees who are related, and assuming the group is big enough, the group can obtain financing for a lower death benefit, which can easily make the Kai-Zen strategy an attractive method for purchasing life insurance for the company and the employees.
Which type of Life Insurance Product is best for Kai-Zen Premium Financing?
Indexed Universal Life (IUL) insurance proves to be the best insurance product for the Kai-Zen strategy for the following reasons:
- It is an attractive asset for third-party lenders to collateralize because the IUL builds cash value over time.
- Since the IUL will contain a “cap” and “floor,” the policy’s cash account remains safe in a volatile market, thus preserving the loan’s security.
- The tax advantage inherent in an IUL makes it an excellent vehicle for establishing an additional income stream in retirement.
Premium financing insurance products is not new to the insurance industry. Third-party financing has been used for decades. Using the Kai-Zen strategy as leverage to purchase life insurance works very well for high-income individuals by allowing them to afford the protections they require and at the same time, maintaining their liquidity.
What carriers allow Kai-Zen to finance their policies?
If you are looking for carriers that work with Kai-Zen financing, you can read our reviews for the following:
Of course, it all starts with a proposal. We can determine what carrier will work best for you with a quick fact-finding interview.
Frequently Asked Questions
What is Kai-Zen financing?
Kai-Zen is a unique combination of financing and life insurance that provides essential protection and the potential to significantly increase earnings for retirement, which might not be accessible without this leverage.
Who is eligible to use Kai-Zen?
Eligible candidates for Kai-Zen are individuals aged 18 to 65 who are in average or above-average health and earn at least $100,000 annually. Individuals over 65 generally cannot participate due to the program’s financing conditions.
What are the benefits of Kai-Zen financing?
Kai-Zen allows participants to utilize a third-party lender for premium financing. This enables the purchase of policies with higher death benefits than what might be affordable ordinarily. It also allows the policy to build significant cash value at a greater rate.
