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Rothish Frequently Asked Questions
Client Financial Questions
What is the smallest policy that qualifies?
The minimum client contribution for Rothish is $36,000/year x 10 years. We also serve clients that contribute more than ten times this amount.
What type of clients qualify?
Household income must be greater than 4X the client contribution. As an example, if the client contribution is $36,000/year x 10 years, their gross household income must be at least $144,000. If the client contribution is $50,000/year x 10 years, their gross household income must be at least $200,000. There is not a net worth requirement for Rothish.
What happens if a client cannot pay their annual contribution due to future financial hardship?
In order for a client to qualify for any premium financing program, they should have liquid cash reserves to service the annual contribution in the event that their income and cash flow suffers in the future. However due to the flexibility of this program, the client could (in theory) skip a year’s contribution and post collateral instead, and pay the amount due in a future year. This would likely reduce the value of the financial outcome, but it would likely keep the policy in-force and the program could continue in its altered state.
Banking Questions
What client financial documents does the bank/lender require?
*The most recent two years of tax returns
*Personal financial statement
*Driver's license
Does the premium financing loan affect the client's credit score?
No. Our lenders do not report the loan to the credit bureaus, so the premium financing loan does not affect the client's ability to qualify for other loans (mortgage loans, business loans, etc.).
Does Rothish require the policy do be owned in a pooled trust?
No.
What are the policy ownership options?
The policy can be owned by the insured person individually, or by an LLC, an S-corp, or a family/living trust. Unlike some other premium financing programs out there, the policy does NOT need to be owned by a master trust in tranches with other policies.
Does Rothish require any outside collateral?
Typically, no. Because the lender doesn't start funding in the first year, the policy serves as the sole collateral, unless the index credits 0.00% multiple years in a row. In such case, there is a slight chance the client may have to post collateral, however it is highly unlikely.
How many banks/lenders does Lionsmark Capital work with?
We currently have 19 different banks/lenders on our platform. Each lender has a different borrowing rate configuration, financial requirements, loan size requirements, etc. Lionsmark Capital will select the bank/lender with the best loan rate and loan terms specific to each individual client.
How do banks/lenders calculate their loan rate?
*Rates typically reset annually at loan anniversary/renewal
*Of our 19 lenders, each uses a different base rate (SOFR, 12mo CME TSOFR, 1yr Treasury, Prime, etc.)
*Some lenders have a 5-year fixed rate that is typically 1%-1.5% higher than an annually resetting rate loan
Can a foreign national participate in Rothish?
Yes, however the policy must owned by a U.S. entity like an LLC, S-corp, or trust. The client would have to qualify per the carrier's underwriting requirements as well.
Policy Questions
What is the minimum client contribution for Rothish?
$36,000/year x 10 years.
How does the retirement income in Rothish compare to a non-insurance based investment account?
Our proposal actually shows this comparison, both from an accumulation standpoint as well as a retirement income stream standpoint. This comparison uses the same client annual contribution for the same number of years, and the same gross return as the policy illustration. The non-insurance based investment account assumes a 1.00% investment management fee and a 24.00% capital gains tax rate (which assumes a $200,000 gross household income for a married couple filing jointly in the state of Texas).
How does Rothish compare to a non-financed policy?
Here's an example:
*Client is a 45-year old male
*Preferred non-tobacco health rating
*Product: SummitLife
*Illustrated using S&P 500 Point-To-Point Cap Focus
*Client contributes the same $50,000/year x 10 years
Rothish Policy vs. Non-Financed Policy
Face Amount:
$2,593,668 vs. $1,000,000 (more than double)
Annual Income Drawdowns:
$150,292 vs. $104,139 (44% more than non-financed)
Net Agent Target After Lionsmark 30% Split:
$41,812 vs. $23,030 (almost 2X more)
What is Lionsmark Capital's split arrangement with the agent?
Lionsmark goes on the carrier application as a co-agent of record for 30%, and the soliciting agent for 70%.
Comparisons To Other Premium Financing Programs
Does Rothish require the policy do be owned in a pooled trust?
No. Unlike other premium financing programs, the policy is NOT owned in a pooled trust... nor is it underwritten in tranches. The policy can independently be owned by:
*The insured person (as an individual)
*The insured person's trust
*LLC owned by the insured person
*S-corp owned by the insured person
What are the policy ownership options?
Unlike some other premium financing programs out there, the policy does NOT need to be owned by a master trust in tranches with other policies.
The policy can be owned by:
*The insured person individually, or...
*An LLC managed by the insured person, or...
*An S-corp owned by the insured person, or...
*A family/living trust
Does Rothish use any Balance Sheet Riders?
No.
Why does this matter?
Balance Sheet Riders come at a cost to the client, which gets deducted from the policy cash value. This added expense creates a drag on the long-term accumulation of cash value, which also reduces the income drawdowns from the policy value.
In addition, agent commissions are paid up front, just like a regular non-financed policy, so agent commission is NOT spread out over multiple years (like some other premium financing programs).
In fact, the target on Rothish cases is typically higher than the client contribution. Here's an example:
*45-year old male
*Preferred non-tobacco
*$50,000/year client contribution x 10 years
*$59,732 target
*$50,000 target paid in year 1
*$9,792 excess target paid in year 2 (because total target exceeds first-year premium)
Does the policy death benefit need to be blended with term?
No, the policy uses 100% base permanent insurance. There is no need to blend in "additional protection benefit" like some other premium financing programs because Rothish's loan design is far more efficient.
Does agent commission pay out spread over 6 years, or up front?
Commissions are paid up front, just like a regular non-financed policy. We do NOT use any Balance Sheet Riders on Rothish designs, so agent commission is NOT spread out over multiple years (like some other premium financing programs).
In fact, the target on Rothish cases is typically higher than the client contribution. Here's an example:
*45-year old male
*Preferred non-tobacco
*$50,000/year client contribution x 10 years
*$59,732 target
*$50,000 target paid in year 1
*$9,792 excess target paid in year 2 (because total target exceeds first-year premium)
What is Lionsmark Capital's split arrangement with the agent?
Lionsmark goes on the carrier application as a co-agent of record for 30%, and the soliciting agent for 70%.
