top of page

9/7: Understanding Premium Financing Life Insurance

If you’re looking to significantly build wealth, it’s imperative you understand how an asset like premium financed life insurance can support your portfolio.

Those ready to maximize their retirement planning should strongly consider this type of solution. It enables you to grow wealth tax-free, while protecting yourself and your family with a life insurance benefit.

In this article, I’ll outline premium financed life insurance so you can decide if it might be a good option for you, First, you’ll learn exactly how it works. Then, you’ll see the different options available, so you can choose what works best for you. Finally, you’ll learn why having a buffer asset like this helps mitigate risk in retirement.

How Premium Financed Life Insurance Works

To illustrate this approach to investing, consider this more common asset-based scenario: Investing in rental properties. Income property investors typically leverage their assets and cash to acquire a new property. Some may choose to pay in cash for a single family home, whereas others choose a down payment plus leverage a mortgage to purchase a multi-unit building. In both cases, investment property owners pay for the property (asset) then make a profit. However, the larger the asset is, the larger the profits become. Taking out a mortgage gives them the ability to make significantly more profit. Premium financed life insurance follows the same model. A lender compliments your insurance policy premium contributions and this creates a large asset: accessible cash value in your policy.

The insurance company provides a handsome return on that invested capital.

Three Types of Premium Financed Life Insurance

There are three types of PFLI policies:

  1. Enhanced Retirement Advantage (ERA)

  2. Deferred Enhanced Funding (DEF)

  3. Traditional Enhanced Funding (TEF)

In order to own a premium financed life insurance policy, the policy must serve as collateral for the lender.

Each policy’s cash value serves as the lender’s primary collateral*. TEF policies may require additional collateral. Check out more information on EFS solutions and types of collateral.

Why Choose Premium Financed Life Insurance

Above all, Enhanced Funding Solutions is dedicated to providing the best service and insight with clients, and we work diligently to maintain transparency and mitigate risks.

Premium Financing offers you an asset to utilize in retirement during a down market. In most cases, client’s main retirement accounts are affected by a fluctuating market. Your PFLI cash value is not an equity like stocks or ETFs.

Take money from this asset without touching your next egg when the market is down.

EFS strives to build wealth for each client’s policy based on their wants and needs. Most importantly, benefits include:

  1. Historical yearly IRR of 8%-15% for retirement

  2. Your policy earns tax-free growth

  3. Enjoy tax-free income with NO qualified asset restrictions–access it like a checking account

  4. More of your money stays with your estate, and with your family

Unquestionably, there is only good that comes from exploring new investment opportunities.

With the support and knowledge of our customer-first approach, Enhanced Funding Solutions can help you determine exactly how to benefit from this type of asset.

In summary,

  1. Premium Financing offers you an opportunity to grow greater tax-free wealth through your insurance policy.

  2. There are several types of PFLI solutions and EFS customizes your plan based on your needs.

  3. The rewards and benefits include better retirement positioning, growing your wealth, and major tax advantages.

Reach out to me today to explore your options. I look forward to answering any questions you may have. – Jeff Faine



901 N Lake Destiny Drive, STE 380

Maitland, FL 32751


Be the first to hear about industry news and stay ahead of the curve on all things premium financing + tax and retirement planning.

bottom of page