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Insurance Wrapper: How Can An Insurance Wrapper Fund Your Project?

Integrity Financial Groups, Inc. > Financial Education > Insurance Wrapper: How Can An Insurance Wrapper Fund Your Project?

Insurance Wrapper: How Can An Insurance Wrapper Fund Your Project?

An insurance wrapper is an insurance policy that insures against the performance, supply, and political risks involved in the transaction that takes on specific risks created by asset values or financial transactions. The insurance wrapper acts as the financial guarantee to mitigate the risks of the project or development to the investor.

While an insurance wrap is often misunderstood, insurers still are not positioned to absorb risks typically held by equity investors or to provide insurance coverage on volatile financial market risks. An insurance wrapper offers several solutions that can provide valuable benefits to support certain types of structures and transactions.

Understanding An Insurance Wrapper

Insurance wrapper refers to a long-term insurance policy wrapped around the policy owner’s investment portfolio that is owned and controlled by the insurance company until payment by the terms of the policy. The use of insurance wrappers moves ownership out of the hands of the policyholder and defers taxation until the end of the policy term.

An Insurance Wrapper refers to a long-term insurance policy issued by a registered long-term insurer, wrapped around the policy owner’s investment portfolio, that is written in the insurer’s name and also controlled by and administered by that insurer until payment in terms of the policy takes place. Insurance wrappers offer asset protection as well as tax planning to the policyholders. The total return from the specific underlining investment portfolio after expenses and tax is allocated to that policy for the policyholder’s benefit.

The policy’s value is equal to the market value of the underlying assets. Investment income will be used to pay expenses relating to the income, asset management expenses and fees to the Company. Upon the policyholder’s death, the policy’s ownership will be transferred to the stated beneficiary specified in the insurance contract.

Estate planning and wealth management services providers typically utilize one or a combination of several products to meet the needs of their clients. These needs broadly include wealth preservation, tax optimization and inheritance estate planning. The products used to achieve these needs include tax-exempt companies, private foundations, trusts and various types of policies issued by insurance companies, sometimes collectively referred to as an insurance wrapper.

Benefits Of An Insurance Wrapper

  • An insurance wrapper an wrap a wide variety of investment assets in an insurance policy.
  • An insurance wrapper can provide asset protection.
  • An insurance wrapper can aid in tax planning.
  • An insurance wrapper is protected by the Insurance Act.
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    About the author

    Dallin Hawkins brings over two decades of expertise within the finance sector, holding executive positions and distinguished as a top performer since 2003. Throughout his tenure, he has orchestrated and structured in excess of $60 billion in volume across diverse industries, including renewable energy, construction, transportation, manufacturing, mining, drilling, and oil and gas sectors. His adept negotiation skills and profound industry acumen have facilitated the successful management and funding of numerous intricate transactions. Leveraging foundational financing principles, Dallin consistently engineers structured and holistic funding solutions. His proficiency spans financial structuring, information technology, marketing, networking, and sales, underpinning his capacity to navigate multifaceted challenges with finesse. Moreover, Dallin's leadership extends beyond transactions, having personally mentored and overseen the development of countless sales executives. His guidance encompasses deal negotiation strategies, adept management of client expectations, and effective time management techniques tailored to the nuances of the finance domain. Notably, Dallin's recent financial venture stands poised to redefine and fortify the financial landscape through unparalleled growth trajectories.

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