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Premium Financing

For clients who want more choice in premium funding.

Today, those who need to purchase a large amount of life insurance—whether to protect their loved ones or for business planning purposes—sometimes prefer not to disrupt their current cash flow in order to pay their premiums.

For these clients, premium financing can be a smart solution. Using this funding technique, the money to pay life insurance premiums can be borrowed at an attractive interest rate. Your client can use the life insurance policy’s cash value as collateral, and repay the loan later, when there is more cash on hand. It can be a valuable alternative for those individuals and business owners who don’t want to tap into their existing funds or liquidate high-yielding assets to pay their premiums.

How individuals benefit

  • Avoids the need to liquidate assets at an inconvenient time.
  • Allows assets to remain invested.
  • Provides a good alternative for those whose annual exclusion gifts or lifetime exemption gifts have been exhausted.

How business owners benefit

  • Better control over cash flow means capital can be freed up for business-critical needs.
  • Provides ease of funding for a wide array of business needs, including Buy-Sell planning, key person insurance and executive bonus plans.

Which individuals and businesses are good prospects

  • Business owners and high net worth individuals who need a large amount of life insurance; and
  • Have the financial ability to pay the life insurance premium, but have assets that are illiquid or are rapidly appreciating; or
  • Have ample cash flow, but it is being used elsewhere.