Premium Financing

Premium finance life insurance is a remarkable tool Saint Laurent Wealth Management uses to allow clients to secure a substantial amount of life insurance coverage without tying up capital. 

Life insurance can offer numerous benefits and play a major part of any financial plan. Premium financed life insurance works by borrowing cash from a third party in order to pay the life insurance premiums of a policy. Once the loan period ends or the insured passes away, the principal and interest of the loan are paid back with the funds from the policy’s cash value, death benefit or personal assets. The policy owner is typically left with the life insurance policy plus benefits without having to tie up capital or liquidate high performing investments.

Why Premium Financing? 

• No need to liquidate high performing investments.
• Keep cash on hand.
• Ability to access full insurability based on total net worth including illiquid assets.
• Maintain current cash flow.
• Part of an estate tax plan (transferring wealth to the next generation).
• Avoid or reduce gift taxes
• Provide a legacy benefit.
• Provide a supplemental retirement income plan

BENEFITS

1. Retained Capital 

One of the biggest selling points for premium finance life insurance is being able to obtain life insurance without tying up capital or liquidating assets. 

2. Estate tax is Reduced or Eliminated

By utilizing an Irrevocable Life Insurance Trust, you spare loved ones the burden of having to pay a large amount of money in estate tax. In some cases, estate tax is completely negated.

3. Smart Business Planning Tool

One of the main types of life insurance Saint Laurent Wealth Management provides is Key Man life insurance. In the event that something happens to a prominent employee, the place of business is covered without having to invest a large amount of capital or liquidate assets.  

4. Many Important Documents Compiled

A major benefit because many of your financial documents and documents pertaining to your assets and legacy are grouped together. In the event anything occurs, it will save your loved ones stress and hardship.

DRAWBACKS

1. Rate fluctuations 

It is important to be aware of the possibility of  rates increasing more than anticipated. If this occurs, you will be responsible for coming up with additional money or collateral to cover the cost.

2. Longer timetable  

Premium finance can be a long process. It often takes much longer than standard life insurance, so be aware of this before starting the transaction.

3. Difficult to Finance the Loans

One popular form of collateral, a letter of credit from the policy holder’s financial institution, can be challenging and costly to obtain

4. Death Benefit

There is a possibility the death benefit could return less than expected. If this occurs, your assets could be at risk once the outstanding balance on the premium finance loan is repaid. 

Contact us today if you are interested in learning more about our premium financing services. We would love to speak with you!

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company.