The Value of Multi-participant Deals

The Value of Multi-participant Deals

The Value of Multi-participant Deals

The Value of Multi-participant Deals

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Life insurance premium financing is a valuable tool for individuals who need life insurance but don’t want to tie up capital. Here’s a look at one of our most successful cases that may provide insight into the true benefits of life insurance premium financing.

The Problem

Recently, Wintrust Life Finance assisted a 590-bed private hospital with financing for both existing policies and future premiums of a multi-insured deferred income program for 277 employees using life insurance policies underwritten from multiple life insurance companies.  The borrowers were two trusts formed by the sponsor: a private, community-owned, nonprofit health care system located in the southeast United States

The Solution

For this particular case, the initial death benefit was $109 million and the expected total death benefit within the next five years will be approximately $365 million. The initial loan amount—to refinance from another lender and cover additional premiums due—was $20.3 million. By the fifth year, the total projected outstanding loan balance will be around $124 million.

Although the deal was complex, Wintrust Life was able to work with the client and its unique structure to get it finalized. In this instance, and for other companies who find a need for a multi-participant deal, financing is a great tool to help retain employees by providing necessary life insurance. These deals can also be used for employee benefits or deferred compensation. The borrower for these programs can be the company employing the participants or, as was the case with this particular deal, a trust or LLC. 

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