Premium financing can be an excellent alternative method of purchasing life insurance for people with significant wealth. High-net-worth individuals and families are familiar with using credit to finance certain liabilities, rather than being forced into the untimely disposition of personal and or business assets, and premium financing is based on this principal.

Premium financing is most appropriate for wealthy individuals or families with current needs for life insurance protection for estate conservation and business succession and/or wealth accumulation strategies, but who do not want to liquidate personal assets at the present time to fund the insurance need.

Key Features

• The financial institution (not affiliated with insurer) may finance up to 100% of anticipated premium plus transaction costs. The loan is for a term of years, renewable at the lender's discretion.
• Client maintains control over collateralized assets.
• Interest rate is based on LIBOR (London Inter-Bank Offered Rate) plus additional basis points.
• Other terms and variables may be negotiated with the financing institution

Eligible Clients

• Wealthy individuals with a current insurance need for estate or wealth transfer strategies
• Closely-held businesses funding a business continuation program
• Individuals engaged in a charitable giving program

Advantages

• Enables wealthy clients to achieve wealth conservation and/or accumulation goals without having to liquidate existing assets
• Clients can take advantage of funds available at low interest rates

Implementation

• Client and their financial professionals determine client has a need for life insurance
• Client and their financial professionals arrange through third party financial institution
• Client or client's trust applies for life insurance
• Client or client's trust uses loan proceeds to pay premium on life insurance policy