Premium Financing allows clients with significant insurance needs to finance payments with little or no out-of-pocket costs. Without the need to liquidate high-yielding assets to make policy payments, clients are able to obtain up to 50% more life insurance.
Premium Financing is actually very simple. Normally, when you obtain a life insurance policy you pay cash to fund it. With premium financing, a bank lends the money to pay the premium and the bank is later paid back from the death benefit. Sometimes the loan is collateralized by other assets of the purchaser, but not always.
Premium financing is most effective when it utilizes the equity in hard assets that are otherwise not creating wealth, such as property. It also offers a big advantage when it is used to fund life insurance outside the estate, thereby avoiding federal estate and gift taxes while creating great wealth for the beneficiary.
Premium financing comes in many variations. Call us to discuss the different programs available to you.
Insurance is the least sexy asset in most portfolios. If it were an appliance in a remodeled kitchen, it would be the garbage disposal — useful, hidden and nothing to show off like that stainless-steel range.
