Premium Financing
What is Premium Financing?
Premium financing is a financial strategy that allows individuals or businesses to secure a life insurance policy by using a loan from a third-party lender to cover the premiums. This approach is generally used by high-net-worth individuals who need large life insurance policies but prefer to preserve their cash flow for other investments or operational expenses.
Using premium financing, an individual could potentially accumulate a very large cash value much more quickly than with a straight IUL or whole life policy, though it’s riskier.
Who Is Eligible For Premium Financing?
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Eligibility for premium financing is typically for individuals who meet the carrier’s eligibility criteria, which generally includes high income.. The specific requirements can vary between carriers/. Overall, it is important for borrowers to carefully review the eligibility requirements and terms of any loan they are considering
Features
Life Insurance Coverage
Premium financing enables individuals or businesses to secure substantial life insurance coverage that may otherwise be financially burdensome to pay for upfront.
Interest and Fees
Similar to other loans, premium financing involves interest charges and potentially additional fees. The interest rates and fees can vary depending on the lender and the specific terms of the agreement.
Financial Flexibility
By using premium financing, individuals can allocate their available capital or liquidity towards other investments, ventures, or expenses, rather than tying it up in life insurance premiums.
