At Schechter, we look for ways to fund insurance in unique ways to create above market returns and unique tax advantages. When electing to work with us, we offer decades of expertise in the areas of wealth transfer and life insurance portfolio management. You will help fulfill your fiduciary responsibility, enhance your clients’ financial position and strengthen your client relationships.
Today, close to forty-percent of our life insurance business is coming from strategic partnerships with trusted advisors from across the United States. Every year we partner with more and more financial service professionals who are busy building their businesses and realize it's easier to use our infrastructure than build it themselves.
We have the breadth and depth of experience to deliver cases across the finish line. We have dedicated professionals with CFA’s in case design, 100 years of experience across our underwriting team, and a servicing team that reviews every policy at least once a year so that nobody is forgotten.
People often think life insurance products are commodities and every company issues the same product. This is far from true as every company issues multiple policies with numerous cost structures and contract terms. Through careful of policy contract language and features, it is possible to find anomalies that exist in certain contracts. By finding these contract anomalies, we can deliver unique and valuable economics to families.
We go well beyond traditional life insurance offerings, and we’re involved in the design and implementation of highly sophisticated techniques. Our technical analysts and legal professionals are constantly scouring the market and conducting in-depth research to find the best possible solution.
Assuming they have liquidity to cover estate taxes, they absolutely don’t need life insurance. In fact there is not much they need (financially) at all. After learning how our firm designs insurance contracts, your clients want to direct pieces of their overall allocation into both our liquid and illiquid life insurance based investment strategies.
After completing their due diligence, clients and advisors realize that our firm has structured many opportunistic, contractual, non-correlated investments that outperform the market. Many clients enhance their investment by incorporating advanced planning strategies to provide meaningful wealth transfer opportunities.
In addition to the traditional use of life insurance to provide liquidity at death, many wealthy families look to life insurance to capitalize on a tax benefit in IRS Code Section 7702 which states the growth of equity (cash value) inside a policy is not taxable. Life Insurance taxation mirrors real estate taxation. A real estate investor is not taxed on growth until they sell their building, and if they die with their building they never pay income tax on any of the growth due to stepped up basis. The same holds true with equity inside a life insurance policy. Families that bear heavy tax burdens can benefit the most from the tax efficiency the life insurance chassis provides. Our clients recognize this as a tremendous way to generate tax alpha.
Investment options include hedge funds, mutual funds, index funds, collared indices, private equity funds, debt/credit strategies, and many more. Some of these are offered in the traditional insurance product world and others require the use of Private Placement Life Insurance (PPLI) which is only available to qualified purchasers.
We typically tell people that there are a ton of poorly designed insurance structures and policies acquired through insurance advisors who don’t know any better. There’s also a ton of bad real estate deals out there structured by developers who don’t know what they are doing. You can’t say all real estate is good or all real estate is bad and the same is true in the life insurance space. There are opportunities for those who are open minded enough to do their due diligence. The more financially savvy they and their advisors are, the more likely it is they will quickly “get it” and capitalize on the opportunities our analysts identify.
In these contracts, the cash grows by the performance of the S&P Index over a 12-month segment. There’s a cap and a floor, like a structured note with complete principal protection. The cost of implementing these market collars through an insurance policy is significantly less expensive than what the banks charge for structured notes. Our programs can generate 4.5% to 6.5% returns. Our short term programs are liquid and profitable immediately and are tax deferred. Our longer term programs will take time to amortize the early charges and that patience is rewarded with the ability to access the returns tax free in the future.
Our experts are happy to answer any of your questions. For a client-specific inquiry, provide us with a fact pattern and we’ll run a needs-analysis with included recommendations.
251 Pierce St.
Birmingham, MI 48009