Case Study: How a Multidisciplinary Team Successfully Implemented a $100M Insurance Plan

Content pillar: Choosing Advisors, Due Diligence & Implementation
Context: High Net Worth Estate Planning — using insurance for wealth transfer and tax mitigation
Geographic focus: New York City, NY; San Francisco & Los Angeles, CA; Miami, FL

Table of Contents

Executive summary

A multigenerational ultra-high-net-worth (UHNW) family headquartered in New York engaged a multidisciplinary advisory team to implement a $100 million life insurance structure to preserve capital for heirs, mitigate federal estate tax exposure, and preserve liquidity for business succession. The team built a coordinated solution combining a survivorship permanent policy (corporate-owned/ILIT-funded hybrid), premium financing, a private placement life insurance (PPLI) sleeve for tax-efficient asset growth, and robust governance to monitor loan and policy performance.

Key outcomes:

$100M death benefit placed on a second-to-die structure.
Initial funded premium year: $6.0M (illustrative).
Premium financing covered 75% of the funded premium ($4.5M loan); client equity contribution $1.5M.
Net present value (NPV) cost scenarios modeled across interest-rate and market-return sensitivities.

Team composition and roles

A successful high-value implementation required tight coordination between specialties:

Lead estate attorney (NY/CA bar, ERISA & tax experience) — designed ILIT/trust provisions, anti-clawback language, and succession triggers.
CPA / tax partner (Big Four-affiliated) — modeled estate and income tax sensitivity, prepared gift tax election planning.
Independent life actuary — stress-tested mortality and cash-value projections against aggressive crediting assumptions.
Broker/placement team (broker-dealers with large-case desk) — obtained multi-carrier illustrations and negotiated underwriting credits.
Premium financing lender (private bank) — provided collateralized loan; negotiated rate floors and covenants.
Trustee / fiduciary bank — acted as ILIT trustee; handled premium funding, loan monitoring, and distributions.
Independent compliance counsel — drafted disclosures, conflict-of-interest mitigations, and oversight protocols.

For a practical discussion on how families choose these advisors, see: Assembling the Team: How HNW Families Choose Attorneys, CPAs, Actuaries, and Brokers.

Structure chosen and rationale

After comparing multiple alternatives, the team selected a layered approach:

Primary vehicle: Second-to-die universal life (survivorship UL) for tax-efficient transfer of estate liquidity.
Investment wrapper: PPLI sub-accounts to hold illiquid/private assets and defer income character.
Funding mechanism: Premium financing to avoid concentrated cash transfers that would accelerate estate-gifting and to preserve capital for business operations.
Ownership/Fiduciary: Irrevocable Life Insurance Trust (ILIT) funded indirectly; trust documents contained loan subordination, substitution-of-collateral, and independent trustee powers.

Advantages:

Maximized leverage while preserving business liquidity.
Kept premium out of insured’s taxable estate (via properly structured ILIT funding and Crummey gifts / loan mechanics).
Enabled investment flexibility via PPLI sleeves to match the family’s private equity exposures.

For details on vendor selection for PPLI and premium financing, see: Vendor Selection for PPLI and Premium Financing: What to Probe During RFPs.

Due diligence checklist applied

The team executed a rigorous checklist aligned to market and regulatory risk:

Carrier financial strength (rated A++/A+ by AM Best / S&P) and track record on large-case UL illustrations.
Contract language review: accelerated death benefit, guaranteed corridors, in-force illustrations, and no-lapse guarantees.
Underwriting flexibilities (preferred classes, tobacco history allowances).
Lender covenant scrutiny: margin-call triggers, collateral substitution rights, recourse vs. non-recourse structuring.
Trustee operational capabilities and fee schedules.
State regulatory considerations (New York Dept. of Financial Services scrutiny for large-case filings; state premium taxes).

See the practical due diligence checklist: Due Diligence Checklist for Selecting an Insurer and Lender in High-Value Deals.

Example financials and fee transparency (illustrative)

Below is an illustrative cost and comparison table used in the underwriting / board presentation (all figures shown as examples — actual pricing varies by carrier, underwriting class, age, and market rates):

Item	Representative figure (illustrative)	Notes
Face amount	$100,000,000	Survivorship UL
First-year funded premium	$6,000,000	Target funding to establish cash value
Client equity / out-of-pocket	$1,500,000	25% of funded premium
Loan amount (premium financing)	$4,500,000	75% LTV on initial premium
Lender rate (typical market range)	SOFR + 1.25% to SOFR + 2.75%	Negotiated with private banks; subject to floors
Lender origination / commitment fee	0.10%–0.50%	One-time fee
Trustee fee (annual)	$15,000–$50,000	Depends on complexity and assets under administration
Broker placement / advisory fee	0.5%–2.0% of premium	Fee models vary; disclosed in engagement letter

Market-rate drivers included short-term reference rates (SOFR). For a reference on SOFR mechanics used to price premium-financing loans, see the Federal Reserve Bank of New York’s SOFR reference page: https://www.newyorkfed.org/markets/reference-rates/sofr

Note: transparency around fees and conflicts is essential. See: Fee Models, Conflicts of Interest, and Transparency When Buying Large Life Policies.

Lender and carrier selection — specific vendors referenced

In the transaction the team considered (and negotiated with) the following market participants:

Lenders: J.P. Morgan Private Bank, Bank of America Private Bank, Goldman Sachs Private Wealth — each provided term sheets quoting rates tied to SOFR with margins that depended on borrower relationship, collateral quality, and tenor. Representative margin ranges (negotiated) were ~SOFR + 1.25% to SOFR + 2.00% (illustrative and transaction-specific).
Carriers: Lincoln Financial Group, Penn Mutual, Prudential — chosen for large-case underwriting benches and competitive illustrated crediting strategies for UL and PPLI wrappers.
Trustees / Fiduciary banks: Northern Trust, Bessemer Trust — hired for trustee independence and execution experience on complex ILIT governance.

These firms and representative pricing ranges reflect what large UHNW teams commonly negotiate; always request current term sheets and documented fee schedules from each vendor before committing.

Implementation roadmap (high level)

Client discovery and objective alignment — estate tax projections and liquidity needs.
Team assembly — retain counsel, CPA, actuary, broker, and trustee.
Carrier RFP and life underwriting pre-submission conference.
Loan term sheet procurement and negotiation (including collateral substitution language).
Illustrations stress-tested across interest-rate and market-growth scenarios.
Contract execution: insurance application, ILIT trust funding mechanics, loan documents, and trustee acceptance.
Ongoing governance: quarterly policy loan monitoring, annual illustration updates, and trustee compliance checks.

A practical implementation checklist is available here: Implementation Roadmap: From Policy Selection to Trust Funding and Ongoing Governance.

Governance, monitoring, and exit planning

Active governance is critical given interest-rate and market volatility risks:

Quarterly loan-to-value and collateral reviews; covenant testing at the lender level.
Annual in-force illustrations prepared by independent actuary to detect adverse trendlines early.
Preplanned exit triggers: prepaid interest reserves, substitution of collateral, partial policy surrenders, or swap of the loan to a longer-term facility.
Documentation standards for corporate records to defend against later disputes. For best practices see: Documenting Complex Insurance Transactions: Best Practices to Minimize Future Disputes.

Regulatory & tax context

Federal estate tax exposure remains the primary driver for UHNW life insurance solutions. For official guidance on estate and gift taxes, consult the IRS resource: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes
Carrier licensing and large-case illustrations are subject to state insurance department oversight (e.g., New York DFS oversight of large-case filings).

Final considerations and lessons learned

Align incentives and insist on full fee disclosure from brokers, lenders, and trustees to avoid conflicts of interest.
Insist on independent actuarial stress-testing of all illustrations and sensitivity to interest-rate shocks.
Choose lenders with long-tenor appetite and carriers with a proven history on large-case UL and PPLI administration.
Build a clear governance playbook that defines breach triggers and pre-authorized mitigation steps to avoid rushed decisions under stress.

For guidance on avoiding misaligned incentives, read: Red Flags in Advisor Selection: Avoiding Misaligned Incentives in Insurance Sales to HNW Clients.

Sources and further reading

IRS — Estate and Gift Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes
Federal Reserve Bank of New York — SOFR reference rates: https://www.newyorkfed.org/markets/reference-rates/sofr
National Association of Insurance Commissioners (NAIC) — Life Insurance Consumer Information: https://content.naic.org/cipr-topics/life-insurance