The Benefits Of Premium Financing For Life Insurance
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Premium financing can be an attractive option to anyone who:
• Needs a substantial amount of insurance for estate-planning, wealth accumulation, liquidity at death, asset protection or business purposes
• Doesn’t want to use their existing capital to pay the premiums
• Is insurable at standard rates or better
• Satisfies the carrier’s underwriting regulations
The main reason it works is very simple -- all parties involved like it. Borrowers like it because they retain their assets to invest for higher returns than the cost of borrowing. Lenders like it because it gives them a secured long-term loan. Insurance carriers like it because it continues to provide them with large premiums, and agents benefit greatly from these objectives. Insurance companies have developed specific products for those who want to finance their policies, minimizing the need for outside collateral while maximizing returns.
Life insurance can be one of the keys to your financial goals, providing peace of mind, both to you and your family knowing that they will be protected if something unexpected happens. If designed properly, a life insurance policy can be an effective tool for addressing important wealth planning objectives, including protection, liquidity, accumulation and legacy.
">What is premium financing for life insurance? It is borrowing money from a third party to pay the policy premiums. Once the policy generates enough surplus cash value in later years, the owner of the policy can then pay back the premium finance loan from policy values. This arrangement is widely accepted by life insurance companies and is utilized by consumers with a minimum net worth (generally at least $2 million) who have a need for insurance and prefer to retain their capital rather than liquidate assets to pay the premiums.
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Premium financing can be an attractive option to anyone who:
• Needs a substantial amount of insurance for estate-planning, wealth accumulation, liquidity at death, asset protection or business purposes
• Doesn’t want to use their existing capital to pay the premiums
• Is insurable at standard rates or better
• Satisfies the carrier’s underwriting regulations
The main reason it works is very simple -- all parties involved like it. Borrowers like it because they retain their assets to invest for higher returns than the cost of borrowing. Lenders like it because it gives them a secured long-term loan. Insurance carriers like it because it continues to provide them with large premiums, and agents benefit greatly from these objectives. Insurance companies have developed specific products for those who want to finance their policies, minimizing the need for outside collateral while maximizing returns.
Life insurance can be one of the keys to your financial goals, providing peace of mind, both to you and your family knowing that they will be protected if something unexpected happens. If designed properly, a life insurance policy can be an effective tool for addressing important wealth planning objectives, including protection, liquidity, accumulation and legacy.
https://www.forbes.com/sites/forbesfinancecouncil/2018/03/29/the-benefits-of-premium-financing-for-life-insurance/
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