Premium Financing

When an estate plan calls for a significant death benefit amount, financing the premiums can be a smart strategy.

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Use leverage to pay for insurance.

Like other successful individuals, life insurance may play a key role in your plan for protecting your loved ones and/or businesses. While you have the assets to afford the premiums, those assets may be ‘out of reach’; for example, real estate, highly appreciating stock, or the family business.

When an estate plan calls for a significant death benefit amount, financing the insurance premiums can be a smart strategy for a few reasons:
  • You may not want to liquidate profitable or illiquid assets to pay for insurance premiums. 
  • Your current cash flow may already be earmarked for other uses.
  • Loans to your Irrevocable Life Insurance Trust are not subject to gift taxes – allowing you to fund the policy while still using the gift tax exemption for other purposes.
  • Financing permits you to purchase a larger life insurance policy at a lower out of pocket cost to you. 
Premium financing allows you to pay the premiums on a life insurance policy - which is usually held in an Irrevocable Life Insurance Trust - by borrowing money from a third-party commercial lender. Often, the policy can be posted as collateral. Once it is set up, we provide ongoing monitoring to mitigate any potential risks until the loan is repaid.