Business Innovators Radio - Interview with Daniel Wachs with Perpetual Wealth Management – Navigating the Complexities and Fears of Premium Finance

Episode Date: January 16, 2026

Daniel has worked in the insurance and financial services business since 1995. He is the founder of Perpetual Wealth Management, LLC and the Perpetual Wealth System for Premium financing transactions. Daniel’s business has been focused on Premium Financing for the last 15 years. Daniel is a National Vendor for Premium Finance Strategies, representing multiple life insurance carriers and finance lenders. Perpetual Wealth Management has funded over $2 Billion of Death Benefit and has over $750 million of funded and/or committed capital loans outstanding, with multiple finance lenders. Daniel works around the country with IMO’s, agents and HNW clients to implement these concepts. His main focuses entail Estate & Charitable Planning – Business Planning and Supplemental Income Planning. He has spoken at many industry events on the topic of Premium Financing. Daniel works and lives in Chicago with his wife, Anna Marie, and has three children, Isabelle, Alexandra, and Andrew.If you are interested in learning more about Premium Financing and how these concepts can be implemented in your practice or financial plan, please book a no obligation 30-minute conversation with me.Learn more: http://www.perpetualwm.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-daniel-wachs-with-perpetual-wealth-management-navigating-the-complexities-and-fears-of-premium-finance

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us, Daniel walks with perpetual wealth management, and we'll be talking about navigating the complexities and features. fears of premium finance. Daniel, welcome to the program. Mike, it's good to be with you again.

I'm looking forward to going over these topics with you today. So, yeah, navigating complexities and fears of premium financing. Great, great topic. Let's get started. Yeah, we kind of, in our previous conversation, chatted about, you know, kind of foundational, what it is and what to expect. Well, now it's kind of like, let's roll up her sleeves and we're starting to dive in and we're start to structure some things. I'm confident, like we've mentioned before, that this is a complex. This is not something you just decide to do one day. Google it, set it up, or even meet with a professional and go, let's set it up. This takes some time and thought and strategy. And because of that, sometimes there's fears. You know, sometimes people go, well, if it takes more than a minute or two

to set up, then, you know, is it too good to be true? Or what if it doesn't work? Or so talk to us a little bit about what are some of those common fears that people have regarding this kind of a program? I think the main, if I think through your question, what are the people's fears? I mean, I think the fear is also related to what are the risks of the strategy. So I want to start there and just say, here's the risk and here's what we try to mitigate through. So, you know, the main risk that come to my mind whenever you're, you know, borrowing funds to to pay the premiums is, of course, you know, interest rates. You know, if our interest rate cycles go up, they go down. We've seen, you know,

ultimately interest rates near zero, you know, years back, and then the Fed raises rates 13 times in a couple years. So, you know, those are, you know, real and fierce. So when we design plans, we have to be able to be flexible, you know, to work through those different strategies. So one of the fears is, you know, what are interest rates going to do? And the good news is that, you know, interest rates have been coming back into lowering because the inflation numbers are finally getting under control. So interest rate is one. The second would be the policy that you're using for the financing.

like we talked a little bit in our last episode is, is, you know, we have to have arbitrage. We're going to borrow money at a certain rate. And we need the policy long term to perform better than what we're borrowing money at. So that arbitrage is super important. So we have interest rate risk. We have policy performance. And then in this strategy, might that in the early years of the transaction,

the cash surrender value is never going to be dollar for dollar of the money going into the policy because of the death benefit and the insurance costs and all, you know, that. And in the early years of an insurance product is, you know, the expenses are higher because, you know, if something happens to a client and I've dealt with this where they make a couple payments and you know and and and I had a client that um got into a car accident and passed away unfortunately great guy but he made two payments of like a couple hundred thousand for each payment and all of sudden you know the death benefit arrives the bank loan gets paid back and his family has you know 20 million dollars um that is protecting it so

the need for insurance is always part of the strategy, but that's why people buy life insurance. You know, all these other things that we're talking about are, you know, our ways to fund it. But the bottom line is his family was protected in an unfortunate situation that happened. But that is, you know, in those early years, then, you know, because that surrender charge is in the policy, then a client will have to post like an outside source. to provide collateral so the policy is always going to be the main source of collateral, but then that outside collateral is going to secure the loan. Because the one thing in this world that clients need to understand is that the lenders, you know, love this strategy because if a client dies, they get paid back, they have it protected.

If you lives, they have to post-collateral. So as long as the bank is secured 100%, whatever they borrowed, they needed secured by the policy and outside collateral. And usually, you know, if there's six years, that outside collateral is not needed anymore. But so we have to have clients that are willing, you know, in the transaction on the front end to know that, yeah, there's going to be some collateral posts. And I kind of give it an example, Mike, of when we buy a property or we buy a house, you know, the common thought is, you know, I need to put at least 20% down, you know, to get a mortgage on the rest of the money needed to buy the property. It's similar in this situation that that 20% is not really being put down or given to the bank, but it's put on the sidelines, you know, to protect the bank's interest in lending the premiums for the client, you know, to the insurance company.

So that's a risk that people have to understand. And, you know, if the policy doesn't perform like expected or like an illustrated, then, you know, that collateral number can, you know, be increased. But it's also decreased as the policy grows. So we got. Just hearing through a few of your points there makes me think from a consumer standpoint, one of the fears could be there's so many moving pieces and it's so complex. What if I'm embarrassed if I tell someone what I'm doing and I don't even know how to explain it and they certainly don't understand it?

And then they challenge the whole strategy. And now I'm second guessing it and I feel embarrassed. How do you help educate your clients so that they have got to have a firm grasp on the benefits so that that doesn't come up? Well, I think it's inevitable that it's going to come up, Mike. I mean, I've been doing this a long time. And I think that, you know, the client, you know, they understand lending. I mean, so that's that part they get, right? I mean, they understand by borrowing money, now, you know, what we're going to pay and the interest rates and all that.

I mean, that's always going to be something that could be on their mind to do. But also, you know, they have to, you know, get to understand the products. I mean, so, you know, being in this business for such a long time, I've seen a lot of different. products and, you know, there's term insurance, there's universal life, there's, you know, index universal life, there's variable light, there's whole life. What product makes the most sense for this strategy? So that's what we have to figure out. Is this client wired towards guarantees? They need guarantees. Then they're probably going to lean towards a whole life policy, right? But when you have guarantees, they're also expensive. And the fact is, is that, and the guaranteed

Whole Life product is, you know, there's not a lot of flexibility in regard to, you know, taking a detour or changing course if life happens and we need to change course. So there's not a lot of flexibility, you know, with the payments and the premium. So, but, you know, I mean, you know, the thing that I like, like I said in the strategy is you educate and depending on the structure, then, you know, knowing and studying and learning. I mean, you have to be able to provide a solution for the client, but then give them the reasons why. And what I found in this relationship, Mike, when you asked about like embarrassed or other things, you know, I really feel if you tell people the truth, especially high net worth

people, I mean, you just, you tell them the truth. Don't try to make up stories. And, and, and, and, and, and, and it's, it's uncomfortable, but it's real, right? I mean, and, and, and life happens, right? Like, we were projecting to make this payment, but, you know, something happened in this business. So we have to be able to figure out and maneuver and maybe not make a payment this year and work with the banks. So these are all the things I think the specialist brings to the table, you know, and it's it's relationships, right? I mean, so, you know, I mean, I feel like, you know, if you treat other people like you want to be treated, I mean, that's kind of the golden rule. And it's a golden rule for a reason. You know, that's an excellent point.

I love how you're like, oh, well, that's not going to happen because it probably will happen. And if and when it does, here's what you do about it. And that's just very, very sane. So let's talk about a little bit deeper about you mentioned this in passing, but some of the performance. How do interest rates that could go up impact this strategy? Because I know that years ago in the late 90s and early. early 2000s, I was in the mortgage industry and I know that you can get a adjustable interest rate, you can get a home equity line of credit for a house, you can get a fixed rate. Sometimes the fixed

rates cost more money. Well, in this world where you're talking about, the interest rates could go up. What does that do to the projections that you are working with? Well, I think it's really important to understand the interest rate impact. Now, Of course, when interest rates go up, that means that the cost of our money is going to be more expensive. That's a given. So, I mean, we do have banks that offer, you know, one-year terms, you know, adjustable rates. That's the most common strategy. But there's also, you know, fixed pricing, 35, 7, 10, your fixed pricing.

And similar to mortgages like you were in, Mike, is that same for me is that if, if, if, if, If a bank's rates are not competitive, I mean, I have to be able to go to other lenders and say, you know, this is the structure of the deal. And the good thing, the nice thing about the, you know, as the policy receives its premiums over time, that as that loan balance gets bigger, usually the, the, the spreads on the money and everything can be lessen, I mean, be lowered. And I do that on a regular basis. I mean, I ask the banks, you know, can we reduce the rate for this client? Every little bit helps because the ultimate goal is that we're going to probably make 10 payments to this policy. And roughly hold the loan for about 12 or 13 years is what I feel, you know, allows the policy to grow enough to be able to, you know, pay the bank back. Now, when rates got super high, you know, what we did.

Michael, and one of the strategies would do is to take, you know, a loan internally on the policy because a lot of the policies that offer, you know, loans, you know, have guaranteed rates. So like if money's costing 7%, the loan inside the policy guaranteed at 5, you know, we may pay the bank back early and then have the client pay into the policy. So knowing how policies work, knowing how banks work, I mean, and then, you know, life happens and we have to be creative and figure out, you know, how do we, you know, how do we make this work for for the consumer or dealing with? Yeah.

Yeah. It's always like, let's wake up today and see what challenges have presented themselves and then let's see what we need to do about it. Life rarely is so dialed in that it's, you know, the same thing day after day after day. So I think that's a great point is you just adapt. You just adjust and adapt and interest rates might go up. They might go down. They might stay the same.

But, you know, if the projections that we, that you put into place on the front end were very relevant and sane, they shouldn't be through the roof anyway. As far as over-promising, they should be pretty dialed in so that if rates did go up, it's not going to be that much off. If rates go down, then you're going to get better projections. So it's all about the expectations. Yeah, and I think that with the, in regard to the rates too, like, you know, when rates increase, what I don't think people realize is, that, you know, that allows banks, insurance companies, you know, to get more yield. And what that allows in some of the products that we use on the indexing side is for the caps, the participation, and all those to increase.

So maybe paying more, but, you know, if done properly, you know, a client could actually earn more as well. So it kind of offsets the low interest rate, low payment. and less performance in the policies because, you know, the insurance companies are struggling, you know, to get yield on their investment. So I think it works hand at hand. Yeah. Yeah, yeah. Very, very good.

Hey, so let's think about this. What should some of the maybe performance metrics be that clients should be looking for in a policy to make sure that these financial goals are met? Well, I think that, you know, is when you have, you know, debt on a policy, you have to have a policy that, you know, has the ability to perform. It doesn't have to perform every year. We want it to perform every year, but it doesn't. But being able to outperform, you know, when I'm borrowing money is critical. That's why, you know, a lot of whole life type policies, you know, the, you know, the, you know, the, you know, the. the interest rate environment is kind of going to dictate the dividend of the insurance carrier.

So, you know, when I was at Northwestern Mutual back in the 90s, I mean, the dividend rate was like 8.5%, right? And then it got to like under five when rates were so low, right? So it was working the same as interest rates where some of these indexing products that we use now, you know, that can link to two different markets, you know, are fantastic. you know, that they can, you know, really grow. And if we're linking our returns to those indexes, you know, the beauty is that we're not right all the time. So if an index is negative, you know, it has a bad year. The stock market is down.

Like in 2008 and 9, you know, the market lost 50 percent, right? I mean, so none of our clients lost any money in these strategies based on what happened in the market. And then we had a 10-year period of time of just riding a market that, you know, just kept going up and up and up. And it was so, you know, that's where you just have to be in tune, you know, with what's happening in tune with, you know, what strategies inside the policies give us the best shot to earn money. And that's, you know, that might be that this strategy this year and it's going to be maybe a different strategy next year. So having an annual review and reviewing all the choices is I think probably the most critical part of this strategy.

That's a great point. And like if you have that review in year, you know, every year. But if let's say then year two or three, you say, you know what, we need to make some adjustments. That does not mean that our original plan was off base. It just means that external circumstances might have changed. Like, inflation or interest rates or whatever the case is. So that is really, really powerful. You don't just set it and forget it. You got to make sure you're doing your annual review. Yeah, there's no, this is not a, you know, set it and forget it strategy.

I mean, that's just not the way this is going to work. And so, you know, with the different strategies that we choose, too, is like, the nice thing, Mike, is that, like, you know, if, let's see a strategy we choose really, it doesn't work for the year. And the nice thing about insurance is that, you know, every year the bank's putting in another premium, another premium, another premium. So, you know, if I got a 10% rate of return in my first year, which is great, you know, let's say the bank put in a half a million dollars for the client and they made 50 grand. That's great. But after year 10, now the bank's putting 500,000 for 10 years. Now you've got 5 million in the policy in year 10 and you get a 10%. You just made 500,000, right?

I mean, so you can make up a lot of early year underperformance maybe with having a really good performance. That's why you got to monitor and really shoot for getting back on track. and that can be done. It's just that the client, you know, has to have resilience and just like anything else. I mean, this is not a strategy that, you know, works in one year or two years. This is a long-term commitment. Yeah, 100%. You know, you had mentioned in our conversation just a few minutes ago, something that I want to go

just a little bit deeper on because you mentioned collateral. And I know that, you know, any bank out there like, hey, give me a, a whole bunch of money and I'm just going to sign my name to it. They need to have collateral. Well, they have the insurance policy for that, but also they might need some external collateral. Is there a benefit to both sides of the equation? So how can getting these loans with collateral be managed to minimize risk and maximize benefits for the client side?

Because I know that minimizing risk and maximizing benefits is on the lender side because the lenders write the big old check. they want to make sure that their name is on a couple different places in case you default. Are there some ways to maximize benefits from the client side? Yeah. So the different ways that people can post collateral is the following. You know, some people, you know, maybe they just have a lot of cash in the bank, right? I'm not talking about, you know, the bank, because I want to be specific is that the banks that the banks that

provide the financing for insurance policies are separate divisions, very specialized lending, and it's not like you go down to your corner bank and the teller knows what premium financing is, right? I mean, this is specific. I work with departments and banks that all they do is finance policies for high net worth people. Now, so we may need, you know, I have a client to their cash and we may use some of their cash in CDs or money markets and put in the bank. we'll put an assignment on that and use that as the outside external collateral.

Some clients will issue and open up a CD with the lender and just use that as collateral, you know, with the lender we're using. Other people, you know, may have investment portfolios and it doesn't, it doesn't, it doesn't, it doesn't change, you know, how the portfolio has to be managed because on the front end, the credit team from the bank that I work with will look at the portfolio and say, okay, we're willing to give you, you know, 70% value of this, you know, as the number we need. So if I'm using an investment portfolio, it's never going to be 100% because of market risk, right? It can go up and down. So they have to put a cushion in there. But the advice, see, I work with a lot of financial advisors, Mike, and I don't want

them to have to, you know, move assets to the bank because some banks require that, and I tend to shy away from that because I don't want to take money from my clients and I'm working with as advisors. But if they know the formula, like if they get X for bonds, X for stocks, and they know what it is, then what we do is usually set up a separate account with what we need. So if a client needs to have $300,000, we'll put it, we'll do a separate account. So we're not tying up if they have a million dollar portfolio. I only need $300. But the banks put an assignment on the account number, which would then tie up all million. So we have to specifically, you know, set up a separate account, the advisors know how to manage it. And then once the policy grows, then that

assignment is released. And a lot of times, these are accounts that the client's not, you know, is using it for, you know, savings and retirement. It's not like they need, you know, that it's something they need in a year or something. So, and then, you know, real estate guys, you know, are, you know, notorious for, you know, having a lot of assets and no cash flow or, you know, they're paying down debt or whatever. So some of them will utilize their relationships with other banks that will provide a letter of credit for the collateral saying that, you know, Mike's good for this, you know, and it's just a piece of paper.

And then we're not tying up because I don't want to tie up, you know, capital for real estate guys because they need it, you know, for, you know, how they earn a living. So, you know, we have letters of credit cash investment accounts. Other insurance policies that, you know, I have cash value in them. I have clients post that as the collateral. So lots of different, lots of flexibility, but also with a strategic guide like yourself, you're able to make sure that they are not going to lock up some asset that they're going to need access to, but still have that collateral there. So I just, everything that I'm hearing you say, it's like, it's a very meticulous, strategic way to set it up, plan for it, and review to make sure everything continues to perform

the way that it is. So I think that is just a really spectacular overview here of some of those fears and risks. So if someone is interested in learning a little more and then also reaching out and connecting with you, Daniel, what's the best way that they can do that? My website is www. perpetual P-E-R-P-E-T-U-A-L-W-M-com. So www.

www. perpetual w-m. There's an email info at perpetual wealth. Phone number is on the website as well. 6-30-4-4-5-13-99. 630-4-4-5-13-9-9. Perfect. Well, thank you so much for coming back on. It's been a real pleasure chatting with you again. Thanks, Mike. I really appreciate it. So great questions, and I look forward to doing this again at some point in time. Thank you so much.

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