Premium Financing is an innovative alternative available to people who recognize the need for life insurance in their financial plan. The financing of life insurance premiums, in one form or another, has been around for almost a 100 years, but because of its exclusive use, very little was known of it by the general public. "Exclusive use", means that only those with very sophisticated financial planning needs, and very adept financial planners and estate/tax attorneys, were aware of the option to finance the premiums of life insurance policies.
These “traditional premium financing programs” enables individuals with a high net worth to purchase life insurance without depleting other assets or changing their normal cash flow. They are able to protect net worth, continue business development, and pass their financial legacy to future generations without altering other financial objectives.
Major Benefits of Premium Financing:
Reduce current out-of-pocket cost for life insurance coverage,
Minimal or no impact on current investments,
Potentially favorable gift tax consequences,
Provide liquidity in a large illiquid estate,
Deferring or avoiding capital gains taxes payable from liquidating appreciated assets.
Who is eligibility?
Not all can participate. Here are some parameters for those who would qualify. They:
Have a need for life insurance,
Have a net worth of $5,000,000 +,
Have an annual income of at least $200,000 + ,
Have sufficient assets to pledge as collateral for a Letter of Credit (generally to pay the difference between the surrender amount of the policy and the outstanding loan.)