Planning area
Premium Financing
New-issue design, ongoing oversight, and four-year unwinds. Same death benefit, lower carrying cost.
Overview.
Premium financing uses a commercial lender, rather than the policyholder's own cash, to pay large life-insurance premiums — preserving liquidity while still building the death benefit the estate plan requires.
I.. The lender funds the premium
A bank or specialty lender pays the annual premium, collateralized by the policy's cash value.
II.. The policy is expertly designed
The policy is structured so its projected growth can outpace the loan's carrying cost.
III.. The collateral is released
As cash value builds, collateral requirements ease and the loan can be repaid or restructured.
Why this works.
The arbitrage is simple in concept: if the policy's internal rate of return exceeds the lender's interest rate, the client captures the spread on a death benefit many times larger than they could have funded with out-of-pocket premiums — without disturbing other investments.
I. New issue
A new policy being designed from scratch for a premium-finance structure.
II. Underperformance review
An in-force loan where the policy is no longer tracking the original illustration.
III. Staged unwind
A structure approaching its scheduled collateral release or loan repayment.
01. Policy & loan audit
Review the in-force illustration against actual performance.
02. Stress-test the structure
Model rate and performance scenarios against the loan.
03. Recommendation
Present options ranging from hold to restructure to unwind.
04. Carrier & lender coordination
Implement the recommended path with all parties aligned.
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