Today’s a Good Day to Plan Your Future


Do you need a large Life Insurance coverage, but don’t want your personal or business Cash Flow to be tied up paying premiums?

We have an answer for you! It is known as Premium Financing Life Insurance. For several decades, high net worth individuals have taken advantage of this program offered by A+ Rated life insurance companies.

There are several factors why it is essential to keep a large portion of your personal or business cash flow. The funds could be utilized for purchasing real estate properties, new business ventures, ongoing projects, expansions, for new hirings, for sales and marketing expenses and others. In return, it makes more business sense in anticipation for a positive ROI for these funds to be invested elsewhere.

What is Premium Financing Life Insurance?

Premium Financing Life Insurance is when life insurance coverage gets to be quite large and will need high annual premium payments. It will be practical for you to finance the premiums. In other words, you borrow the premiums from the bank and pay the interest as opposed to using your own cash out of pocket, or from the business cashflow. In return for the premium payments, the insurance company guarantees protections stipulated in the life insurance policy. 

The premium loan should be quite flexible for you. The bank can finance up to 100% and you pay interest only. You will have the option to contribute a portion of the annual premiums. It could be in the range of 10% to 50% that would significantly lower the money owed at the expiration date of the loan, typically for a 10-year term It will provide you with sufficient net cash value, wherein a percentage can be used to pay back the loan. You have the discretion to choose what type of loan arrangement to the bank.

(Please note that premiums might be needed in first couple of years as a collateral for the loan.)

Leveraging Life Insurance Premiums Could be Highly Beneficial

As mentioned earlier, you can continue to keep the cash out of pocket or current business cash flow to be used for other personal or business needs.  But there are several reasons why large life insurance coverage is needed Premium Financing Life Insurance could be used for the following:

  1. Estate Planning – Provide the funds to settle federal and state estate taxes. This prevents the sale of valuable assets, specifically business and property.
  2. Wealth Preservation – Guarantees that the estate can maintain its current value and be transferred to heirs without having to dispose the assets to cover expenses.
  3. Keyman’s Plan – Protect the business from the loss of an owner or a person whose unique talent and expertise is vital in running the company.
  4. Tax Free Retirement – Cash value of the permanent plan continues to accumulate on a tax-deferred basis, serving as future security during retirement years.

Our Ideal Clients

High-Net-Worth Individuals with $5Million or higher in assets. The is also known as Tradition Premium Financing that has been used by highly affluent individuals for decades. It was at its peak in the late 2000s during the financial crisis with an exceptionally low rate of interest and resurged during the 2020s covid pandemic.   

High-Earner Individuals that are making at least $200K in annual revenue. This can be business owners, professionals, key executives or others.

During the early 2010s, a new program classified as Modern Premium Financing was established which catered to individuals who earned six figure annual revenues. Statistics show that this program has significantly opened the door to a larger chunk of the US population. What was available to only 3.5% has today grown to 18% of the US population. It’s possible that YOU can apply for Premium Financing Life Insurance.

How does Premium Financing Life Insurance Work?

  1. You entrust a insurance brokerage firm to contact duly authorized banks who will start the process of the Premium Financing application.
  2. The insurance brokerage firm will select from an array of A+ Rated life insurance companies that offer Premium Financing and choose the permanent life insurance plan, which most ideally is the Indexed Universal Life (IUL) plan which is best suited for your current needs and submit the life insurance application after pre-qualification.
  3. The bank makes premium payments to the life insurance company. There will be instances wherein the client will participate to pay a portion of the premium to the insurance carrier based upon the type of premium payments agreement with the client and the bank. (If the client chooses to pay portions of the premiums, the loan owed will be much lower.)   
  4. You make payments to the bank for interest of the principal either with monthly or annual premium payments.
  5. The loan is typically repaid after 10 years of the loan agreement, possibly using the policy’s net cash value, from personal savings, through refinancing, or at the policyholder’s death. 

(Note: Please be aware that interest payments coming from your business cash flow are subject to tax right off! Please consult with your accountant regarding this matter.)

Conclusion:

When your net worth continues to increase, the need for larger life insurance coverage is a better strategic approach for estate planning, wealth preservation, tax free retirement and other old models. Premium Financing Life Insurance is an advanced and smart financial strategy. While it can be a powerful asset for affluent clients, your financial advisor should explain its advantages as well as any financial risk. It is important to set up your plan properly to achieve your individual goal(s).    

It is instrumental in putting in place a plan for business continuity while maintaining a higher level of liquidity that might otherwise exist if the business were to pay premiums directly, as well as for high earner individuals to accumulate significant savings specifically for tax free retirement.

If you would like more information on how you can avail yourself of Premium Financing Life Insurance, please make a list of all your questions and we will respond as soon as possible.

ADDRESS:
10505 Sorrento Valley Rd. Suite 110
San Diego, CA 92121

OFFICE Hours:

Monday through Friday: 7am to 6pm
Saturday: 9am-3pm
Sunday: Closed

Premium Financing Life Insurance Partners is neither an insurance nor operating company. Instead, we connect individuals with life insurance providers. Products and services are offered exclusively by life insurance companies and the third-party lender. Descriptions are informational purposes only and are subject to change. Premium Financing Life Insurance Partners is a subsidiary of Wealth Financial Life Insurance Services, Inc.