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The Benefits of Premium Financing



By taking a third-party loan to fund the policy’s premiums, clients can get the life insurance they needwithout sacrificing liquidity or cash flow.


Many of America’s affluent individuals have been using the leveraged strategy called “premium financing” for years to address their concerns about:


• Estate Planning

• Wealth Accumulation

• Business Insurance Needs

• Business Continuity

• Business Succession


Many clients may need life insurance to address estate or business concerns with the desire to continue growing and protecting their wealth. By financing their premiums, they are able to take the money they would’ve paid in premiums and potentially generate a higher yield than the cost of the loan.


For example, let’s say a client takes a loan of $100,000 at a 5% interest rate. That’s $5,000 of out-of-pocket cash flow the first year, and they retain $95,000 to invest. If they put that

$95,000 into an investment that earns 7%, that initial $95,000 will grow to $101,650, and the life insurance policy they purchased with $5,000 is still there to protect their assets.

What draws entrepreneurs, business owners, and affluent individuals to this type of strategy?


The answer would be the wealth-creating power of leverage. By freeing up the capital they otherwise would’ve used to fund their life insurance policy working in their business or other investments, they give their assets more freedom and may potentially earn a higher return.


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