Permanent insurance policies can be leveraged in RazorPlan to model strategies such as an Insured Retirement Plan (IRP). To leverage the insurance policy, enter data into the fields provided, RazorPlan also allows you to model existing borrowing that has been placed against an insurance policy.
Monthly Draw: Entered the monthly income amount that is going to be drawn out against the cash value of the policy.
Index: Enter the percentage that the monthly income draw will be increased by on an annual basis.
Start At: Enter the age the monthly draw is going to start at.
End At Age: Enter the age the monthly draw is going to stop at.
Loan Type: Select ‘Personal’ to indicate the loan against the cash value is for personal use, select ‘Corporate’ to indicate the monthly draw is for corporate use. This option only applies to insurance policies that are corporately owned.
Cashflow Type: When the loan type is set to Corporate, select ‘Tax-Free’ to indicate that the cashflow is being drawn out as a tax-free income or select ‘Dividend’ to indicate that the loan cashflow is being drawn out as a dividend.
Current Loan Balance: Enter the current, if any, loan balance of any existing insurance leveraging.
Interest Rate: Enter the interest that is being charged on the amount that is being borrowed.
Pay Interest: Select ‘Yes’ to indicate that the interest on the loan is being paid, select ‘No’ to indicate that the interest is not being paid back and the loan, balance and interest, will be paid off with the insurance on death.
Starting At Age: If the Pay Interest is set to ‘Yes’, enter the age at which the interest is going to start being paid back at. This age can be any age between current age and life expectancy.
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