Brief 01 · For the professional reader

How the comparison is drawn

A short account of the after-tax math, the cash-first liquidity test, and the rules that keep this a fact-finder rather than a product pitch.

Professional use only Illustration governs No issuer named

This is not a client document. It informs a fractional CFO, strategic business consultant, or other referring professional who may identify a candidate and refer the case. Binding numbers come only from a complete illustration. It is not a client document.

The thesis

A profitable company holding surplus operating cash earns a low, fully taxed rate on an idle asset. Redirecting a measured portion into a properly designed permanent policy can outperform that cash on an after-tax basis while preserving liquidity — and while providing coverage the cash never can, including key-person protection and a vehicle for nonqualified deferred compensation.

Either / orEach year’s amount funds the policy or remains in the reserve.

0.80 × CVAccessible policy liquidity, used in every ratio.

After-tax comparison

The reserve side converts pretax yield to after-tax yield with the deductibility formula. State tax is deductible against federal; the rates are never added.

Effective tax = federal + state − (federal × state)
Example: 21% + 5% → 24.95%, not 26%.

Policy values are taken as already net of charges. There is no cost-of-insurance model in the tool. Until an illustration is pasted, the cash-value path is a conservative placeholder: year-one value is about 87% of premium, and cumulative value crosses cumulative premium around year five.

Cash is not interchangeable with cash value

Premium is diverted from the reserve. The remaining reserve continues to earn the same after-tax yield. Cash is first-line liquidity. Policy value is a backstop, accessed by loan, with real mechanics. The fact-finder therefore shows cash against the floor and total accessible liquidity against the floor.

liquid cash(t) = max(0, prior cash × (1 + after-tax yield) − premium(t) + ongoing contribution)

If cash as a share of liquid operating capital falls below 25%, the tool notes it. Below 20%, it suggests considering a lower premium or a longer funding period. These are alerts. They never block a request.

Significance is scale, not a grade

Operating capital grows with the business, net of diverted premiums. Significance is accessible policy value divided by that remaining operating capital. Below 20% is below-band; 20–67% is a solid representative balance; above 67% is a primary component — for a mature design, that is the strategy working as intended. There is no “dial back” language.

What this tool will not do

Name or select an issuer.
Expose chassis or blend as a user control.
Flatter the placeholder so a later illustration disappoints.
Collect medications, conditions, or other medical detail, or email the client.
Treat a diagnostic as a hard stop.

The request action prepares one internal notification to the practitioner. Field underwriting remains a brief conversation conducted offline.