Premium Financing is a strategy whereby a qualified borrower accesses 3rd party financing to pay for large life insurance premiums.
What is Life Insurance Premium Financing?
Empower your wealth for today, secure your wealth for tomorrow.
Premium Financing is widely accepted by the insurance companies and is reserved for qualified clients. Individuals and businesses can obtain their desired amounts of coverage with minimal cash flow.
The insurance companies have constructed products that are tailored for these financed plans, to minimize outside collateral and maximize returns. The insurance loan is provided by large banks and institutions dedicated to serving the needs of high net worth and ultra-high net worth individuals, families, and businesses.
Choose an expert guide for your premium financing journey.
Vérité has been dedicated exclusively to the premium financing market since 2009. We have a deep knowledge of the life insurance space with more than 50 years of combined experience on our team. This knowledge, coupled with our deep lending relationships with a suite of banks, allows us to offer a turnkey approach that we can tailor to achieve your goals.
Premium financing risks and considerations you should know
Interest Rate
The rate on bank loans has the potential to increase. Your initial plan assumes a future set of bank loan interest rates, which are usually not guaranteed.
Collateral
Your amount of client collateral or premium contribution could be greater than expected; additional premium or collateral may be required to keep the policy in force.
Policy Performance
The actual life policy index credits or fixed credits experienced will likely be higher or lower than the initially assumed rate. This could result in your strategy not performing to expectations.
Renewal
It’s possible that the bank will not extend financing beyond the initial commitment. The loan term noted is not guaranteed and is subject to change.
Tax Risk
As with non-financed policies, policies with “policy” loans that lapse have potential tax consequences.
Change in Financial Conditions
A severe adverse change in the borrower’s financials could cause the bank to call the loan if covenants are broken.