PREMIUM FINANCING

There are a variety of premium financing programs available to finance life insurance. The critical component when using premium financing is to make sure the insurance product desired and the lending product is matched or combined in a way that will meet your unique needs. Effective programs and designs offer more advantages while effectively mitigating the risk involved in financing.

Financing is subject to the lender’s collateral and financial underwriting requirements. Financing lenders typically require additional collateral during the early years of a policy in the form of cash, cash equivalents, marketable securities, and a personal guaranty or a letter of credit from a bank approved by the lender. Interests in closely held businesses and real estate are not generally acceptable collateral. Premium Financing is complex and involves many risks, such as the possibility of a policy that lapses, loss of collateral, interest rate and market uncertainty, and failure to re-qualify with the lender to keep the financing in place and maintain the desired level of insurance protection. In certain situations, additional out-of-pocket contributions may be required to retire the debt and/or maintain the desired level of insurance protection. A well planned exit strategy should be in place prior to accepting any financing arrangements.

disclaimer
*Premium Financing is complex and involves many risks, such as the possibility of policy lapse, loss of collateral, interest rate and market uncertainty, and failure to re-qualify with the lender to keep the financing in place and maintain the desired level of insurance protection. In certain situations, additional out-of-pocket contributions may be required to retire the debt and/or maintain the desired level of insurance protection. A well planned exit strategy should be in place prior to accepting any financing arrangements.