Life Insurance Blog

Finance Your Life Insurance Premiums
February 15th, 2009
in premium financing

Many individuals with a net worth of 5 million or more are most likely eligible for a Premium Financing Life Insurance Program.  Easily explained:  While most pay cash to fund their life insurance policy, when you premium finance life insurance, you will get a loan from a bank to pay the premiums.  The lender or bank is on the life insurance policy certificate and is repaid later on from the death benefit. This helps the purchaser to acquire an insurance policy without having use his immediate cash flow. The lender of the loan can either be collateralized by other assets of the purchaser or not.  If you do not decide to collateralize the loan, expenses will become greater. This strategy has become very popular these days…

In some instances these arrangements are sometimes referred to as “free insurance”, because of the arbitrage you make on the loan. The individual who took the loan to buy the life insurance  is hedging that the performance of the life insurance policy exceeds the lending rate of the bank. When  low interest rates come around like in the marketplace today, this is usually an easy hedge. If high interest rates are evident you have to look at the other value adds a premium financed policy gives you. 

Be sure to get with your life insurance advisor to see if you qualify for this amazing program…..  Read More here on Premium Financing.

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