',scripts=["polyfill/browser-polyfill.min.js","bower_components/url/url.js","polyfill/childnode-remove.js","polyfill/nodelist-foreach.js"],scriptStr="",i=0;i<\/script>';var appShell='';document.write(base+scriptStr+appShell)}Premium Finance | Rohe Levy Financial and Insurance Services
Premium Finance can be an alternative method of funding life insurance premiums from a commercial lender as opposed to paying them out of pocket.
Premium Finance with Life Insurance May Provide:
An income tax-free death benefit
Tax-deferred cash value growth
Tax-free access to cash value
Creditor protection, depending on ownership and state of issue
What are the Benefits?
Paying loan interest and pledging collateral instead of paying premiums may help:
Reduce the cost of the strategy
Increase the rate of return on cash value accumulation and/or the death benefit
Preserve and grow wealth that has been retained instead of liquidated to pay life insurance premiums
What are the Risks?
Interest rate risk – If borrowing costs rise to a greater extent than originally projected, it could result in more out of pocket costs or collateral
Performance risk – The policy’s cash value can fluctuate and may be less than projected. This can result in more collateral required, less net death benefit, and potentially a shortfall in cash value to repay the loan
Exit strategy risk – A plan should be in place to repay the loan which can be done via a loan or withdrawal from the policy’s cash value, using cash flow from retained assets, using the proceeds of a liquidity event, and/or some combination
Collateral risk – The lender will evaluate the collateral pledged and depending on the asset(s) pledged ie. cash, marketable securities, other cash values, these assets may increase or decrease causing more collateral to be pledged