If you’re searching for more information about premium financed life insurance, you’re in the right place. Unlike the policies you can get by filling out a form online, or by visiting your nearest insurance office, this type of insurance requires working with a niche expert.
Don’t worry, that doesn’t make premium financing complicated. Finding the right expert simply requires a few meetings to vet potential candidates.
Why do you need to work with an expert to get this kind of policy? Premium financing is completely unique for each individual. The policy itself is specialized for your needs - from the death benefit to the way the asset itself is structured.
Yes, I said asset!
Life insurance itself has value now, not just when someone dies. It can grow interest - more on that later.
More prominently known policies like homeowner’s and car insurance are regularly used. But life insurance is hopefully never used. And because people don’t like to think about dying, they rarely look into how this asset could work for them, rather than just being another bill to pay.
In my experience, I see the same thing all the time:
Most people get a life insurance policy after having kids.
They simply guesstimate how much their family would need if they died.
They pick a policy with a premium they can afford, and
They stop thinking about it altogether.
Except for that monthly or yearly bill - they think about that.
Did you know that over 50 years ago, premium financed life insurance was introduced as a tool to fund your life insurance in a different way: one that didn’t require you to pay yearly for 3+ decades?
Because we hope to never use life insurance, it sure feels like we’re wasting money when we pay those yearly premiums. So how do we go from wasting money to making money? Here’s how.
How Does Premium Financed Life Insurance Work?
According to research by Capital for Life, 72% of high-net-worth individuals choose premium financed life insurance as an investment vehicle.
However, you don’t need to be ultra-wealthy to do this! Before you choose premium financing, it’s key that you meet with experts like me and others in my industry to get a well-rounded understanding. This is for your peace of mind, and to make sure you choose to work with a firm who is committed to your best interests.
Now, let's discuss everything you need to know. Here are some of my most frequently asked questions:
What is premium financed life insurance?
Premium financed life insurance is a strategy that allows you to grow tax-free interest in your life insurance policy by contributing to the policy in conjunction with borrowed money from a third-party lender.
In other words, you contribute your premiums over 5, 7 or 10 years (instead of over decades) while a lender also contributes a large lump sum to the policy.
This over-funds the policy with cash value. All of that extra value earns interest for you to use as tax-free income.
Why should I use premium financed life insurance?
Simply put, with the leverage available for premium financing, you can grow substantially more wealth without putting a large amount of your own assets into the policy.
Moreover, with this policy, you never feel like you’re throwing away money. Instead of paying a monthly or yearly bill and never seeing that money again, you overfund the policy up front and watch that interest grow, grow, grow.
The tax-free IRR is hugely attractive for those who know their other savings will require chunk tax payments during retirement.
What are the main benefits of Premium Financed Life Insurance?
No need to “rent” term insurance during working years.
Substantially more cash value compounding in your favor.
Potential for positive arbitrage between the policy’s cash value growth rate and premium financed loan rate.
Potential for supplemental tax-exempt retirement distributions.
Tax-free death benefit outside the estate.
Who should have premium financed life insurance?
For those who are in relatively good health, have reputable credit, and are seeking large life insurance in 7+ figures, premium financed life insurance is an ideal choice.
Where Can I Get Premium Financed Life Insurance?
If you're looking to explore premium financed life insurance, we hope you will reach out to us at Enhanced Funding Solutions!
We are a specialized financial services firm with significant niche expertise in premium financed life insurance.
Over the years, we have built strong and unique relationships with both insurance carriers and speciality lenders to place our clients in the strongest possible financial position.
I look forward to hearing from you; email me at firstname.lastname@example.org or call us at 773-318-9608.