Jon Loyhayem, a trailblazer in finance who kick-started his career at 19 and rapidly climbed the ranks to senior management by 26, setting new standards in the industry. Co-founding ALEVO in December 2020, Jon continues to drive innovation and expansion, establishing ALEVO as a prominent player in financial services. An accomplished speaker, he has inspired thousands on topics ranging from entrepreneurship to technical sales skills. Beyond work, Jon enjoys reading, surfing, and weightlifting. His dedication and expertise have shaped ALEVO into a thriving company, making him a true leader and visionary in the field.
Episode Highlights Here:
Brett
Fantastic. Let’s dive right into the topic at hand, which is premium financing. So John, I know we’re also going to touch on the context of, you know, kind of what went wrong with some of these premium financing plans here in a minute. But let’s just start out with what’s the what’s the, what is premium financing? And what’s the best kept secret when it comes to premium financing.
Jon
Okay, so premium financing is when you finance a life insurance policy, instead of paying with your own money, you pay what you pay for the life insurance policy using the bank’s money. Now, why is that? Great? Why is that awesome? Well look at it this way. What else do we actually pay cash for nowadays, right? In most cases, we’re paying you to buy a house. When was the last time you heard of anyone buying a house all cash unless you’re about to refi? 20 minutes later, or a couple days later, commercial properties? I don’t I don’t think I’ve heard of anyone buying commercial property and cash in the last 15 years. Right? Cars, right? We finance our cars, we finance our motorcycles, or yachts and so on and so forth. So premium financing is buying, let’s say, was developed originally for buying a 25 or $50 million death benefit or life insurance policy using as little money as possible. Right, it was just using the bank’s money. Now in the simplest concept, what would happen is that you would borrow money from the bank, you would buy this life insurance policy, when you pass away, your bank would get the money that they loaned you plus interest and it would come out of the death benefit. All right. So let’s say you bought a $50 million policy. You and the interest, the premium and the interest in that case, when you passed away was 12 million. The bank would take their 12 million they’re happy because they got their interest, your family would receive 38 million.
Brett
Right. Are they perfect? Yeah, so you’re able to finance what you would have bought anyways. But instead of buying with cash, you’re going to use the bank’s money I need to finance it and then get a bigger payout. And the bank gets paid when you die with the interest and whatever, whatever the amount that was, and your family gets the other benefit. Is that a fair summary? Yes.
Jon
Excellent. And one benefit of life insurance is that it’s income tax free. So the death benefit is 100%. Income tax income tax free estate tax, most of the time, people who need these types of policies do this for state estate tax purposes. So I think you can correct me if I’m wrong, but the state tax exclusion is around 13 million
Brett
per person per year right now, yeah, and then set to code probably cut to about 5 million that we’ve heard and 2026 per person, you know, so a married couple of about 10,000,020 26, single bought five, but we’ll see where those numbers actually shake out. But right now, it’s at the highest, it’s been a long time, which is about 13 per person.
Jon
And you’re and I do think that they’re gonna go down, we’re always saying the taxes are gonna go, you know, what’s the current US debt, what’s going on, taxes are gonna go up, what most people don’t realize, actually is taxes have been increasing, they just might not be income tax. During the Cares Act, one thing that changed, and this is completely unrelated, but a lot of people don’t realize is, is a lot of people who had money in IRAs, if you passed away, before you took all the money out, the IRA, or 401 K is now an inherited IRA, pre the pre the Cares Act, that IRA would just transfer, if I inherited an IRA, from my dad, that IRA would just transfer over into my IRA, I could just do a direct rollover, I could just move the money into my own retirement plan. Nowadays, what’s happened is you have 10 years to take that money out, and pay all the income taxes that weren’t paid on that. On that money that’s in that IRA. And for that 401k, it was something slipped in to increase taxes. And what most people don’t realize is that taxes are going up. But it’s the taxes that don’t affect most people. Like what percent of the population, does that affect that at a certain time? Maybe one half a percent of people who are inheriting IRAs from their parents? Or are half a percent of people are affected by that right now and think about what percentage of people will this estate tax exclusion actually affect? right people? How many people are actually going to inherit more than five or 13 million? Now, if you’re in California, you know, you buy a shack of a house? It’s 1.2. I’m in the market looking for something and constantly disappointed. But yeah,
Brett
So yeah, that’s a great point. I mean, that’s, that’s, that’s actually a good thing to think about, right? Looking at tax flow, not just cash flow, and understanding that if you’re getting an IRA from your mom or your dad, and it’s 10 million bucks, let’s just say, right, guess what, you need to take a million he basically a year over that. 10 years? I don’t know if it’s divided equally, right? But you’re going to pay taxes on that million, it’s going to be ordinary income tax, which has the highest tax rate, am I hearing that right, John, on that IRA piece? Yes, it is. That’s, whereas before, it would have just rolled into your IRA and would have pushed out until you were a certain age, right? And then you take the minimum required distributions, right?
Jon
Yeah, exactly. Which is actually, which is what happened when my dad passed away. I was 19, when I was 17, when he passed away, which is why I’m so passionate about this industry, he had like $10,000. Ira, I just rolled it over and used it to pay for college. Right, but I didn’t, and I paid the penalties on it. But I could have rolled it over into my regular IRA versus most people would have now you have to take that money out. Little by little. So there’s that you’re exactly right. And on the higher amount, it causes a lot of issues.
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About Jon Loyhayem
Jon Loyhayem is a trailblazer in the financial services industry, having kick-started his career at the young age of 19. By 21, he rose to the position of manager, and by 26, he became a senior manager, an impressive feat considering the average senior manager was in their early 50s. With a talent for growth and expansion, Jon and his team opened multiple financial service offices in Arizona, Michigan, and Southern California, setting new benchmarks for success in the industry.
In December 2020, Jon took his expertise and passion for financial services to new heights by co-founding ALEVO. As a leader in the company, he continues to innovate and expand its reach, solidifying ALEVO’s position as a key player in the industry.
Jon has spoken on stages, having addressed audiences of over 2,000 attendees on topics such as entrepreneurship, following one’s dreams, and technical sales skills in financial services. His engaging presentations have inspired and motivated countless professionals to pursue their own paths to success.
When Jon’s not looking at ways to scale ALEVO, he enjoys activities such as reading, surfing, and weightlifting.
Jon Loyhayem’s exceptional achievements and unwavering dedication to his craft have helped shape ALEVO into the thriving company it is today. His expertise, passion, and commitment to growth serve as an inspiration to both his team and others in the industry, making him a true leader and visionary.
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