At Capital for Life, we offer advisers and their high net worth clients the full range of financing options when buying a life insurance policy.
Financing the up-front premium of a life policy is a way to pay for life insurance. Instead of using cash or liquidating an investment portfolio to buy a policy, the premium (cost) of the policy can be paid in instalments. Alternatively the whole cost can be paid upfront by borrowing the premium from a bank or premium financing company.
Here are 4 ways to pay a premium for a life insurance policy. Choose the option that best suits your client.
Premium Finance Life Insurance
Life insurance premiums for high amounts of cover are often paid for in a single premium up front at the start of the policy. Instead of paying this single premium in cash, a client takes a loan to buy the policy. There can be several advantages to premium financing a life insurance policy including:
Benefits of Premium Financing Life Insurance
Leverage - multiplies the effect of the insurance policy’s investment returns.
Arbitrage - borrowing costs are lower than the returns of the life policy creating a net benefit.
Zero Down Payment - premium financing up to 100% of the policy premium means clients can to use their capital to buy higher yielding assets and invest into business ventures and not lock up capital.
Maximise Life Cover - financing the premium means your client can buy more life cover when healthy and younger.
Ways to Pay for Life Insurance
Multi paying a policy allows a high net worth client to spread the cost, or premium of a life policy, over a number of years. By multi paying a life policy, an individual can get the life cover they need but the cost is spread over a number of years. Multi-pay is also known limited pay.
With lifetime pay, you pay the premiums of your life insurance policy for the rest of your life. Depending upon which policy you choose, your premiums can remain level or increase over time.
Refinancing Life Insurance
Refinancing a life policy means taking out a new loan to pay off an existing one. Refinancing a plan on a lower interest rate can save you money and also allow equity to be released from older life policies.
Capital for Life works closely with professional advisers to design premium financing solutions that meet a clients needs and goals.
Read More with our Premium Financing Life Insurance Frequently Asked Questions (FAQs)