Five questions to ask about a legacy arrangement
Many leveraged insurance arrangements were set up years ago, in a different rate environment and sometimes for different goals. If you or your client holds one, these five questions are a good place to start a review.
1. Does it still serve the original purpose?
Family, business and estate plans change. Confirm the coverage still matches the need.
2. What does the facility cost today?
Check the current rate, how it resets, and any fees that apply on renewal.
3. How is the collateral position trending?
Compare the policy's actual values with the original illustration, and ask what would trigger a call for more security.
4. Is there a clear repayment plan?
If the exit is vague, it is worth defining one now.
5. Would a refinancing improve the terms?
Sometimes the answer is no. A fair review should tell you that too.
General information only. Not tax, legal, insurance or investment advice.