Your clients have worked hard to create significant assets for their families, and perhaps even a business, and it’s important to protect them adequately. Clients want to be assured their family can maintain the lifestyle they have become accustomed to without the fear of running out of money, regardless of their health situation. If they are business owners, they may want to protect key people within their company, fund a buy-sell agreement, a deferred compensation plan or other selective benefit plans. Regardless of their motivation, life insurance plays a significant role in protecting their interests.
Life insurance is a valuable financial planning solution that often requires large premium payments. Many business owners and high-net-worth individuals haven’t invested as much as they should or could in life insurance. Cash flow can become an issue – many people find themselves asset rich, but cash poor. Their assets are illiquid. However, if there is an issue when it comes to purchasing life insurance, it’s more than likely to be an issue for your family or business if you pass prematurely. Learn about the opportunities available to implement a solid financial plan.
What is Premium Finance
Premium financing is a popular insurance and estate-planning technique. It is an agreement that involves the lending of funds to a person, company, or trust to pay an insurance premium. These loans are provided by a third party, typically a bank, at favorable rates and the borrower will be required to pay the interest on an annual basis. In addition to the interest rates, collateral will be needed – starting with the life insurance policy.
A well-designed premium finance strategy can strengthen an estate or business plan and help overcome planning obstacles – such as cash flow to pay premiums without liquidating assets.