Premium Financing: A Tool to Pay Life Insurance Premiums

Premium financing may offer high-net-worth individuals the ability to borrow the premiums to pay for an insurance policy, allowing them the use of funds they might have otherwise used to pay for the insurance. Premium financing makes most sense when the individual has a definite need for insurance. The goal of a well-structured premium financing program is to have the individual pay as little out-of-pocket as possible for life insurance, balanced against the risk that the interest rate of the loan will exceed the performance of the policy. Premium loans can be repaid in three main ways: 1. during life, from the borrower's available assets, 2. during life, from policy cash values, and 3. at death, from policy proceeds.

Premium Financing: A Tool to Pay Life Insurance Premiums
Source: Insurance News Net