Frank Crystal helps successful entrepreneur secure $250 million in life insurance coverage

Situation: A client approached Frank Crystal & Company looking to acquire a significant amount of life insurance. Although the desired amount of life insurance supported the client’s financial circumstances, there were numerous underwriting challenges.

Concerns:

• The client wanted $250 million of life insurance
• Already had $60 million of life insurance coverage in place
• Underwriting challenges for such a large sum included the client’s recreational piloting activity, and significant international travel, among others.

What FCC Did: Frank Crystal carefully assessed carriers’ capacities and the reinsurance sources available in the marketplace and leveraged relationships with carriers to minimize the number of underwriting requirements – usually extensive for coverage of this scale. Frank Crystal used a combination of term and permanent life insurance from 12 different carriers.

Results: Over the course of several months Frank Crystal successfully secured an additional $190 million in life insurance, bringing the client’s total to $250 million. In spite of the client’s profile and strict guidelines from several carriers, all polices were place at the best rating class.

Frank Crystal salvages a 20 year old policy and helps this family fund a potential estate tax issue

Situation: A retired business owner and his spouse were referred to Frank Crystal after their wealth manager conducted a review of the couple’s assets.  The wealth manager found that 20 yeas prior, the clients had made a large lump sum payment into the $10 million dollar survivorship whole life insurance policy to fund a future potential estate tax issue.

The policy didn’t perform as expected and the values were insufficient to sustain coverage without additional premiums. The client was advised that the policy could recover on its own and the required cash flows would be funded by annual policy loans.

Concerns:

• The projected accruing loan and interest would eventually create a large lien against policy benefits and reduce the insurance amount significantly.
• Additionally, a very small portion of the insurance benefits were actually guaranteed.

What FCC Did: Frank Crystal evaluated several alternatives to leverage the client’s investment in the policy as well as the cash values which had accumulated over 20 years. Frank Crystal recommended that the client transfer all values, including the loan, to a new policy, which offered a fully-guaranteed insurance benefit for life, without dependency on environmental factors such as dividend assumptions and inherent rates.

Results: This solution provided a guaranteed death benefit and resulted in approximately 80% more insurance benefit at policy maturity than projected under the previous policy. The new policy required no additional out-of-pocket premiums and the transfer was affected without income tax consequences.