Premium Financing
What are the Advantages of Premium Financing?
Enables the ultra-affluent to purchase large amounts of life insurance by borrowing funds from a financial institution.
Why would a Wealthy individual want to borrow money to pay for life insurance?
- Very Affluent individuals usually have access to the lowest cost of borrowing funds.
- Clients can benefit from potential arbitrage between the growth in cash value in the insurance policy versus the interest due on the loan each year.
- This strategy is most often used in estate planning and business continuation situations. Example, the insurance policy proceeds could pay for the client’s estate taxes at death, or provide liquidity for a surviving spouse or heirs, rather than forcing the family to prematurely sell illiquid assets.
- This should not be confused with Free Life Insurance, however; it is a much more effective way to purchase large amounts of permanent life insurance than the traditional way of just paying for the premiums out of pocket.
- UFC4Wealth custom designs plans for our clients to achieve maximum efficiency. Our planning process takes into consideration each client’s risk tolerance, time horizon, and access to capital. Another key component we evaluate carefully is the exit strategy that each plan must have to pay off the loan to the bank.
- We also plan for the “what ifs” during the life of the plan. These programs typically involve long- term commitments, and we want to make sure that the strategy is stress-tested to avoid any hiccups in the future.
Services
How can we help you?
Our goal is to help you reach your lifelong objectives. We offer access to exclusive products and services tailored to the needs of affluent individuals, executives and business owners – providing value and excellence for over 20 years.