What is premium financing for life insurance? It is borrowing money from a third party to pay the policy premiums. Once the policy generates enough surplus cash value in later years, the owner of the policy can then pay back the premium finance loan from policy values. This arrangement is widely accepted by life insurance companies and is utilized by consumers with a minimum net worth (generally at least $2 million) who have a need for insurance and prefer to retain their capital rather than liquidate assets to pay the premiums.
Premium financing can be an attractive option to anyone who:
Needs a substantial amount of insurance for estate-planning, wealth accumulation, liquidity at death, asset protection or business purposes
Doesn’t want to use their existing capital to pay the premiums
Is insurable at standard rates or better
Satisfies the carrier’s underwriting regulations