When it comes to paying life insurance premiums, you have choices. While your financial strategy may require you to purchase a large amount of life insurance, you may have some reservations about paying your premium dollars using your existing assets or current cash flow.
For example, you may believe you can earn more on your money than you would pay in loan interest and fees. You may have illiquid assets, such as stocks, bonds, real estate or business assets, that you prefer not to access in order to fund your life insurance purchase. Or, perhaps you prefer to preserve your cash for other purposes. Whatever your individual circumstances may be, you do have an alternative: premium financing.
It’s an innovative financial strategy designed to help individuals buy large amounts of life insurance for personal or business purposes, while leaving cash or other assets in place — or available to be used in other ways. So whether you are using life insurance for estate funding, philanthropic and legacy purposes, or business planning purposes, you can now leverage the power of borrowed funds from a commercial lender to access the premium dollars you need – while you continue to acquire, grow and preserve your other assets for your heirs or charities of choice.
Who benefits from premium financed life insurance?
- Affluent individuals who want to purchase life insurance to leverage the value, tax advantages and wealth which is left to the next generation and/or charities of choice.
- Business owners who don’t want to use existing assets, but do want to fund executive benefits such as a buy-sell agreement or key person insurance. Leveraging the power of credit to pay your life insurance premiums may enable you to save on taxes — and keep your investment options open for other opportunities. And paying life insurance premiums with borrowed money can minimize your out-of-pocket outlay.