Скачать или смотреть What is Premium Finance? - Premium Financing Specialists

The economic leverage of life insurance and premium financing can indemnify exposure to financial liability at a fraction of the actual cost. The institutional loan environment has tightened resulting in "recourse" only loans to fund policies. The collateral requirements often include the cash values and death benefit policy assignments, assessable liquid assets and personal guarantees to secure funding. Minimum net worth requirements generally start at $5,000,000 with liquid assets of 3,000,000 and the client's ability to pay the annual interest due. In addition, the lending institution may require a loan repayment date that precedes the life expectancy of the client.

The economic value of premium financing hinges on the reasonable expectation of the client's projected mortality and the net rate of return credited to the policy's cash values. Although all forms of permanent life insurance could be applicable under long term up market, most advisors shun variable universal life because of the exposure to potential loss. Even variable universal life contracts that provide some "floor" guarantees, the expense loads that support these guarantees are generally cost prohibitive.

Generally whole life policy's guaranteed premiums are too expensive and inflexible to use in an ever changing loan environment. Participating whole life policy proposals illustrate non-guaranteed dividends as the arbitrage solution to bank loans. Historical dividend performance is no indication of future performance, but may provide some indication on the probability of the non-guaranteed dividends. Index universal life projections are based on an indices' historical performance to illustrate a premium financing proposal. Current assumption universal life is based on current interest rates credited to the policy after policy expenses have been paid. Again, the arbitrage between the loan interest and net policy return is the economic play.