Premium Finance and You
Premium finance is a finance strategy where policy owners will pay sizeable life insurance premiums in conjunction with borrowing from a third-party lender, rather than tying up their own capital.
We all know how the affluent class and the wealthy investors expect extremely favorable loan terms to purchase investment-grade real estate, similarly, they are often offered favorable loans to purchase large amounts of life insurance instead of paying premiums out of pocket.
Why Is Premium Finance Important For Medical Professionals, Hoteliers and high Income Earners?
- Ability to buy higher insurance policies while keeping out of pocket premium payments relatively low
- Don’t have to tie up precious capital for paying policy premiums
- Ability to use financial leverage by borrowing from a lender at low-interest rates to make premium payments
- Needs good credit, good cashflow, and good net worth and due to the lucrative nature of this investment, not everyone qualifies for premium finance
- A rare opportunity to produce a very attractive (tax-free) IRR for a very nominal out-of-pocket cost
- A mature lending institution is your debt partner in this strategy so you are not the only one assuming the risk
- Needs a savvy investor to understand this product which has been used by wealthy families for decades
Good To Know...
Depending on your current income, you may quality for an insurance plan:
- With Tax Credits or
- May qualify to get discounted rates based on your income of your household
- All plans may cover essential health benefits, pre-existing conditions and preventive services