Premium Financing Overview

Premium financing is an alternative method for paying Life Insurance premiums. The idea behind premium financing is that a High Net Worth client (5M minimum) has a present need for Life Insurance protection AND sound financial reasons not to liquidate assets to pay the premiums.

By borrowing the premiums, high-net-worth individuals will pay as little out-of-pocket as possible for Life Insurance, balanced against the risk that the interest rate of the loan will exceed the performance of the policy. Premium loans can be repaid in three main ways: 1) during life, from the borrower's available assets 2) during life, from policy cash values, and 3) at death, from policy proceeds.

While the leverage can be a great tool, there are many RISKS in these programs that must be thoroughly examined. Keep in mind there are many different programs that we may utilize and not all have the inherent risks explained in the next section Risks vs Rewards.