Premium Financing Explained

What is Premium Financing?

Premium financing is an opportunity to purchase a large amount of life insurance without paying the actual premiums out of pocket.

Who Is It For?

High-net-worth individuals that understand the power of life insurance and are comfortable with long-term financing.

MAKE YOUR LIFE INSURANCE WORK FOR YOU

Premium financing may be a bit unorthodox for those only familiar with run-of-the-mill strategies, but it offers incredible advantages that can radically shift your financial future.

  • Premium financing uses a loan from a highly rated bank to fund life insurance premiums
  • Therefore you reduce the cost temporarily to the cost of the interest rate on the loan
  • This makes for a low initial out-of-pocket commitment for a large amount of life insurance

WHY PREMIUM FINANCING?

  • Reducing the opportunity cost of your funds - your current cash flow may be committed to other expenses.
  • Reduces your liquidity needs, especially helpful if your assets are not readily convertible to cash.
  • Paying a small portion of the premium via interest (and posting collateral) as opposed to paying the full premium.
  • Positive arbitrage between the interest on the loan and the return on the life insurance cash value.
  • Gift the interest instead of gifting the principal.
  • Protecting your estate, utilizing leverage (other peoples money).
  • Myth #1: It’s free insurance
  • Myth #2: It’s suitable for everyone
  • Myth #3: It’s risk-free
  • Myth #4: It’s only for new insurance policies
  • Myth #5: Any Financial planner can arrange it for you

Premium financing is NOT free insurance and it is NOT for everyone.
It’s only relevant to high-net worth individuals that are comfortable with collateralized financing deals.

Is it risk free? 

No, like in any collateral-based financing deal, risks exist. The question is how you manage those risks and whether or not  you work with a professional planner who has enough experience to avoid them.

Your financial planner should be able to predict potential risks and take precautionary measures, even before you start the deal.

What's Next?

With more than 10 years of premium financing experience and over 60 successful financial outcomes, we have established meaningful long-term relationships with our clients.

We’ll work together to find our chemistry and evaluate whether we can indeed deliver our signature positive financial impact for you. When you feel we’re the right fit, we’ll get straight to work on delivering results.