Premium Financed Life Insurance

Most people don’t mind owning life insurance – they just hate to pay for it.

Until 1996, unless you wrote a check for the full premium, there was no other way to buy life insurance. Necessity is the mother of invention – Meet Financed Life Insurance. The option to finance life insurance like you do your business and real estate assets is finally here.

Premium financing isn’t for those who can’t afford the premiums for their life insurance. Instead of deploying your personal or business capital into life insurance premiums, one may now borrow the premiums from a bank and pay the lender interest only until the loan is repaid from the policy’s cash values (or other resources) or the insured dies retiring the loan with the policy’s death proceeds. Your dynasty trust or business would own and be the beneficiary of the policy for the remaining proceeds without affecting your balance sheet.

Wouldn’t it make sense to continue this type of financing vehicle while your retained capital earns in excess of the cost of funds?