Why Premium Financing?
The most notable reasons why you might choose to finance your life insurance premiums would include:
2 Reasons
1. Estate taxes
2. Preserve cash flows
Advantages and Primary Considerations
Entering into any lending arrangement should be done with temperance. While the advantages and benefits may be exciting, looking at all aspects of the transaction is vital to moving forward with confidence.
Advantages
Our financing designs can create significant advantages by offering the opportunity to:
* Reduce your short-term cost or out-of-pocket expense of purchasing life insurance substantially.
* Maintain liquidity, use, and control of your assets.
* Maximize the use of your lifetime gift tax exclusion, passing substantial amounts of assets to the next generation tax-free.
* Find efficiencies and create advantages by limiting costs.
* Leverage existing life insurance cash values to collateralize the loan while still allowing cash values to grow.
Primary Considerations
Every solution that we engineer for our clients will be customized to their individual needs, but important things to understand remain the same across all of our plans;
* The fundamental need for life insurance coverage must be your first consideration not the ease of paying for it.
* Permanent life insurance, especially whole life insurance, can be seen as a rather low-risk solution. The introduction of financing adds interest rate risk to the equation and must be carefully understood as changes in the underlying interest rates can create an increased cost.
* The experience of the life insurance company can directly impact the performance of the policy itself resulting in the need for potentially larger amounts of collateral to secure the loan.
* Entering into any agreement involving financing should be done with the advice of your tax advisors and legal counsel.
Entering into any agreement involving financing should be done with the advice of your tax advisors and legal counsel.
