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How Do Premium Financed Life Insurance Companies Work?

If I had a dime for every time someone asked me how premium financed life insurance works, my kids’ piggy banks would be overflowing.

In the most simple terms, PFLI is a strategy for over-funding a life insurance policy.

We maximize this strategy in three basic steps:

  1. The client contributes a fixed amount toward the policy’s value for up to 10 years.

  2. A lender also contributes to enhance the clients participation, significantly increasing the cash value of the policy. a. By utilizing the policy itself as leverage, lenders provide premium financing on life insurance policies thanks to their stability as collateral.

  3. The insurance company pays interest on the cash value in the policy.

This enables the policy owner to grow tax-free wealth. Historically, the cash on cash Interest Rate Return (IRR) is between 8%-15%.

This type of investment vehicle provides fixed returns and ensures guaranteed downside protection.

Premium Financed Life Insurance: Why Use a Buffer Asset?

I’ve encountered a recurring theme lately. Many seem to be looking at the state of the financial sector and balking.

Whether someone is concerned about investing in a bear market, holding out for “the right time”, or waiting for a correction – the truth is there is no perfect window. Rather than halting investments (or worse, selling them) in a down market, consider seeking out fixed investment strategies to provide some balance to your overall investment efforts.

Beginning your research into a premium financed life insurance policy should be no different than any other investment research. Take your time learning how the process works, and how it can work for you.

What IS different about this strategy versus a typical equity-based investment is that PFLI is untouched by market fluctuations:

  1. When your stocks and ETFs drop, your PFLI policy does not.

  2. When the real estate market goes wild, your PFLI stays consistent.

Adding this type of fixed, tax-free growth strategy helps my clients weather a bear market without having to touch principal assets.

It is equally important to note the only outside factor that affects PFLI is the current interest rate. Many PFLI policies use variable rates. Some use fixed rates, meaning fluctuating interest rates are a moot point. For clients who select a variable rate, there is no concern about near term incremental shifts in interest rates since clients have an option to access a cap on the rate. In comparison to near term fluctuations, long term interest rates actually impact the outcome far greater.  This is why having access to a cap on the rate is a major advantage for clients. Remember, we are still in a historically low interest rate environment.

Why Work with Enhanced Funding Solutions?

I focus exclusively on this niche because PFLI is a strategy my partners and I have been utilizing ourselves for over 15 years. 

We deeply understand the power of leverage, and our personal experience as clients first means we know how to identify the kind of opportunities we expect for our own policy growth.

We believe in creating a welcoming, transparent environment so each client is comfortable and confident in their investing decisions. 

I, along with the entire EFS team, strive to ensure each client has the strongest possible position while ensuring they feel confident and well-guided in our working relationship. Contact EFS or reach out via email:



901 N Lake Destiny Drive, STE 380

Maitland, FL 32751


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