Why should I consider financing new life insurance premiums?

The primary reason that people premium finance new life insurance is for wealth transfer and estate tax needs and further they are able to finance the purchase of this needed insurance and the on-going premiums with little or no out-of-pocket costs. This financing option will allow the new policy owner to keep their savings, high-yielding investment or real estate in place, making money versus liquidating these assets to make insurance premium payments.

This beneficial interest arbitrage has become extremely utilized as it allows the premium finance policy owner to leverage their good credit to acquire the insurance they need and want while leaving their current investment holdings un-disturbed.

In what situations should I consider financing life insurance versus paying the premiums out of pocket?

If you are considering premium financing new life insurance but have the financial liquidity needed to pay the premiums, it would be worthwhile to have an analysis of both options conducted. If done properly, an analysis will factor such variables such as your current rates of return, investments, risk factors and a contrast of utilizing a premium finance loan factoring current interest rates, length of loan, loan fees, etc.

Please contact us to speak with an insurance expert that will assist you with conducting a full analysis and evaluation to aid you in determining whether it is economically wise to purchase new life insurance coverage with out of pocket funds versus financing the premiums. By sharing some basic information, we can obtain the data needed to complete an analysis to assist you with answering this question and any other questions that you have regarding this topic. Call now (888) 511-5110 or email us at info@premiumfinancedirect.com.

Do I have to be in perfect health to get approved for premium finance life insurance and will a medical exam be required?

A prospective insured must be insurable by an A rated insurance carrier or better. This does not mean that you must be in perfect health to qualify. In some cases, one spouse will be uninsurable while their partner may qualify.

Before a new policy can be issued, the prospective insured will need to undergo a medical exam that will be ordered by and paid for by the insurance company. The exam traditionally takes less than a hour and can be completed at your home or office.

What are the important points I should consider when choosing a premium finance program and lender?

There are many factors to consider when determining which premium finance lender and premium finance program I should select. The following bullet points address some of the questions that should be answered and evaluated before moving forward with a premium finance lender and premium finance program.

• Will this premium finance lender and program cater to my needs as a high net worth individual?
• Will the amount of life insurance that I can finance with this program meet the death benefit proceeds needed to meet my wealth transfer, and federal estate planning tax needs?
• Has the lender garnered legal opinions from leading industry firms regarding the loan's structure and the statutory insurable interest?
• Is the lender utilizing any portion of the insurance commission to offset the loan's interest rate?
• Is the lender's funding source a national or internationally recognized bank or financial institution?
• Is the interest rate for the loan competitive for today's market?
• Is the lender claiming that the loan is a fully "non-recourse" loan?
• How long has this lender been a premium finance lender?
• Is the lender a licensed premium finance lender in the state in which I would like to purchase insurance?
• Will this lender and program allow me to choose the state of domicile of the policy's ownership?
• Has this lender been fully transparent with the insurance carriers and have they shared all of the details of the program and program documentation to the satisfaction of the insurance carriers?
• Is this lender offering upfront payments of any kind and or is an outside investor/ stranger requesting to be involved in the program.
• Does the lender require me to sell the policy at a future date and if so does the lender want to participate in any commissions generated from the sale of the policy.
• Is the term of the loan at least 5 years or more?
• Is this lender taking any ownership of any kind in my policy?
• Is this premium finance lender asking me to sell this policy or transfer my ownership or beneficial interest in this policy within the first two years of the policy's issue?

What if I have existing life insurance in place, does this prohibit me from financing new life insurance?

It is certainly possible to finance the purchase of new life insurance if you have existing life insurance in place, providing you have a net worth that is in excess of your existing life insurance. Generally, an individual can obtain life insurance that approximates their net worth.

For example if a person already had a $1 million life insurance policy in force on their life and their net worth is estimated at $10 million, then it may be possible to premium finance an additional $7 to $10 million of new life insurance. As insurance carriers place limits on the amount of life insurance that can be put in force on one insured, it will be important to speak with an insurance or financial professional regarding your available insurance capacity.

If you would like to speak with one of our insurance specialists regarding your total insurance capacity or learn more about premium finance, please call us toll free at (888) 511-5110 or email us at info@premiumfinancedirect.com.

What are my options with the policy at the end of the loan term?

Depending on your estate planning objectives and/or wealth transference objectives, one or more of the following options may be available to a policy owner at the maturity of their premium finance loan.

• Repay the loan with the outcome of retaining ownership of the policy and assuming the responsibility of paying the policy's future premiums.
• Extending the term of the loan with the lender
• Working with a new lender to re-finance the original loan thereby repaying and removing the original lender. In this situation, the new lender will assume the prior loan and will pay the ongoing insurance premiums for the new loan term.
• Exploring the option of selling the policy on the secondary market for life insurance.

If you would like to speak with one of our insurance specialists regarding your options available at the maturity of a premium finance loan or to learn more about premium finance, please call us toll free at (888) 511-5110 or email us at info@premiumfinancedirect.com.

How can I be assured that I am getting the best loan terms for my needs?

You are wise to shop the market of carrier approved premium finance programs to ensure you find a program that fit your needs and offers the best interest rate, lowest fees and best loan terms to accommodate your needs. Premium Finance Direct was established to deliver the entire market place of carrier accepted premium finance lenders to you. Further, we assist you with evaluating your available premium finance options ensuring that you are able to secure the best loan for your insurance and estate planning needs.

If you would like to speak with one of our insurance specialists to ensure that you are getting the best loan and loan terms, please call toll free at (888) 511-5110 or email us at info@premiumfinancedirect.com.

If I decide to premium finance life insurance, what is going to be my upfront, out of pocket costs?

Depending on the program,, the cost can be minimal or can be greater depending on the program, the collateral required and the amount of legal review required to assess the program. Some programs may not require out of pocket spending to establish the trust and obtain a legal representation to review the program, however, many programs will require that you pay out of pocket for both of these items. Some programs will also require you to pay a credit fee or set up costs that can range from a few thousand dollars to as much as $5,000.

As fees can vary with each program it is important to properly evaluate each program in detail to ensure that you are able to work with the program that will best accommodate your premium finance needs. To speak with one of our premium finance specialists regarding the different fees associated with the different premium finance programs that you qualify to use, please call us now at (888) 511-5110 or email us at info@premiumfinancedirect.com.

What if my insurance needs change in the future and I no longer need my coverage, may I sell my policy and what will be the tax treatment for the sale proceeds if I decide to sell the policy?

Before considering the sale of your life insurance policy, we recommend that you explore other alternatives. However if selling your policy turns out to be the best option for you, there is a thriving secondary market for the disposition of unwanted life insurance policies and depending on the age and health of the insured and the policy's premium cost, the policy when sold can generate the funds needed to repay a premium finance loan. To qualify for selling a policy, an insured must generally be age 70 or greater and the policy must have been issued at two years prior.

Regarding the tax treatment of a life insurance policy that is sold in the secondary market, Premium Finance Direct is not qualified to provide tax advice and, therefore, it is recommended that you speak with your CPA or tax advisor to discuss the possible tax consequence that may result from the sale of a life insurance policy.

We can share that many advisors suggest that the tax treatment of the sale of the asset of an insurance policy that has been owned for over two years is tax free up to the policy's basis (or total premiums paid to date). The sale proceeds in excess of the policy's basis are generally considered to be taxed as capital gains. The exception to this is if the policy's cash surrender value is greater than the policy's basis, then the difference between the basis and the cash surrender value is suggested to be treated as ordinary income and the proceeds above the cash surrender value is then suggested to be treated as capital gains.

Again the sale of any asset can result in tax consequences and it is, therefore, important that you speak with your CPA or tax advisor regarding any potential tax consequences.

If you would like to speak with one of our attorneys or CPA's, please contact us to schedule an appointment by calling us now at (888) 511-5110 or email us at info@premiumfinancedirect.com.

Can I payoff the loan early if I choose and if I do pay it off early, are there any prepayment penalties?

Depending on the premium finance program and its terms, paying off the loan before the scheduled loan maturity date may or may not result in additional fees for the borrower. Many of the new and existing programs allow for early loan repayment although certain fees may apply. As pre-payment fees may result from early repayment, it will be important to speak with your insurance advisor and legal counsel to determine your options and the fees that may be associated with these options.

To speak with one of our premium finance specialists regarding the different fees associated with the different premium finance programs, please call us now at (888) 511-5110 or email us at info@premiumfinancedirect.com to schedule an appointment.

What if the insured dies immediately after the policy is premium financed and put in force? Who will receive the death benefit proceeds?

Similar to purchasing and owning a life insurance policy without financing the premiums, if the insured dies while the policy is in force, the death benefit will be paid to the policy's beneficiaries. The one difference of a policy that was financed is that the premium finance loan must first be repaid in full and then the remaining death benefit proceeds will be paid to the policy owner's beneficiaries.

Can I extend the loan beyond the current loan term if I would like to continue to finance the premiums?

Yes in some situations and with some premium finance lenders it may be possible to extend the term of your loan. This will depend on the cost of the policy's premiums, the current health of the insured and the amount of accumulated debt in relationship to the policy's face amount. A new trend that we are monitoring closely is the re-financing out of the original premium finance lender, whereby a new lender will assume the previous loan amount and continue to provide ongoing financing to the borrower. While this is not an entirely new concept, we are seeing more premium finance lenders making this option available to policy owners.

To learn more about extending your loan or to inquire about premium finance programs that offer a loan for the life of the insured, please call to speak with one of our insurance and premium finance professionals toll free at (888) 511-5110 or email us info@premiumfinancedirect.com.

What happens if the insured or borrower does not have the means to repay the loan at the end of the loan term?

At the maturity of the premium finance loan, the borrower is obligated to repay the loan in full, petition the lender to extend the term of the loan, find an additional lender to re-finance the loan thereby removing the original lender. Alternatively, if the loan is not repaid in full, the lender is within their right to foreclose on the asset of the life insurance policy.

Fortunately, many lenders will provide a short-term extension on a loan to keep the borrower from defaulting on the loan if the borrow needs a few additional weeks beyond the loan's maturity to procure the funds needed to repay the loan. Although many lenders will provide this short-term extension, it is not wise to assume that every lender will be so accommodating. It is therefore important to remain mindful of the maturity date of your premium finance loan to ensure that you allow ample time (two plus months is recommended) for the time needed to explore the available exit strategies in advance of the loan's maturity.

Please call to speak with one of our insurance and premium finance professionals toll free at (888) 511-5110 or email us info@premiumfinancedirect.com to learn more about extending your loan or to discuss your options at the end of a loan term.

What type of collateral will I be required to post if I finance a policy?

The amount of collateral that you will be required to post will vary based on the requirements of the premium finance program, lender and the insurance carrier that is issuing the policy. Some insurance carriers and premium finance lenders will require 100% of loan amount to be posted as collateral while some will ask for a little as a personal guarantee for 15-25% of the loan amount. Whatever the collateral requirement, there is a direct correlation between the interest rate, the programs fees and the amount of collateral posted. The more secure the lender is made by the policy owner posting a larger amount of collateral, generally the lower the interest rates and fees associated with the loan. The inverse is also generally true, less collateral equates to higher interest and fees as the lender has a higher risk exposure.

To learn more about the collateral requirements and fees associated with each premium finance program, please call to speak with one of our insurance and premium finance professionals toll free at (888) 511-5110 or email us info@premiumfinancedirect.com.

Can I work directly with a premium finance lender or do I also need to work with an insurance agent as well?

An insured will need to work with a licensed insurance agent that will interface with the premium finance lender and the insurance carrier. If you have a licensed insurance agent that is representing your premium finance interests, please have them contact Premium Finance Direct as we will enable them to have access to the marketplace of carrier approved premium finance programs.

If you do not have an agent or advisor that is extremely experienced as a premium finance lender and you would like to be referred to a premium expert in your local area, please call us for some qualified referrals.

To speak with an insurance and premium finance professional in your area, call us toll free at (888) 511-5110 or email us info@premiumfinancedirect.com.

Can I still get a "non-recourse" loan or do I have to post collateral and/ or sign a personal guarantee?

Although multiple websites and certain insurance agents may still speak of the availability of non-recourse premium finance or the borrowing of money to buy life insurance without the requirement to post any collateral or sign a personal guarantee of any kind, the days of insurance carrier approved "non-recourse" have come and gone. It is true that there are still programs available today that "suggest" that the policy's asset value is collateral enough, and although in some cases the future secondary market value of the policy may exceed the loan amount, the insurance carriers were wise to require that borrowers have some "skin in the game." Without skin in the game of at least a personal guarantee, lending money without consideration looks too much like "free insurance," which is illegal in all 50 states and the very mention of such could result in undesirable changes to the beneficial tax benefits afforded to life insurance owners. Therefore, all legitimate premium finance programs require the insured/ borrower to provide a level of consideration ranging from as little as a promissory note for 25% of the loan to as much as 100% collateral covering the loan in it's entirety.

How much life insurance can I finance?

The answer to this question will depend on several factors including your age, net worth, the amount of existing life insurance coverage currently in force on your life, annual income, outstanding debt and estate tax/wealth transfer needs. The generally accepted rule for someone that is in their retirement years is that they can acquire an amount of life insurance coverage that approximates their net worth, however, as the answer to this question will vary on a per person basis, it is important to contact an insurance agent, financial advisor or tax professional to seek guidance.

If you would like assistance with answering the aforementioned question of how much insurance you can buy based on your personal situation, please contact us to speak with one of our insurance specialists in your area. Call us now to schedule a consultative call at toll free at (888) 511-5110 or email us at info@premiumfinancedirect.com.

Can I use my own bank to finance my new life insurance?

Although there is a growing number of well known national and international banks that are providing the funding behind the majority of the premium finance programs, these programs require that you comply with submitting your loan request though insurance agents and financial advisors that work with these programs. If, however, you are willing to post 100% collateral for your loan, there is a chance that your business or personal bank may loan you the funds needed to finance new or existing life insurance coverage.

If you would like to explore your premium finance options or if you would just like to learn more about which programs are available in your area, please contact one of our specialists by calling toll free at (888) 511-5110 or emailing us at info@premiumfinancedirect.com.

Do I have to be age 65 or older to benefit from financing my life insurance premiums?

Although the largest percentage of the premium finance market consists of high net worth individuals age 65 and older, there an several financing programs that are designed to accommodate high new worth individuals that are younger than age 65. In fact, some premium finance programs can provide needed financing for insured that are as young as their mid 40's.

To learn more about which programs are best suited to your needs, please contact one of our specialists by calling toll free at (888) 511-5110 or emailing us at info@premiumfinancedirect.com.

Are there any other uses for premium financing?

There are multiple uses for premium financing life insurance although the primary use is to provide for wealth transfer and to pay estate tax liabilities at the death of the insured. Many companies finance life insurance for key persons or buy-sell agreements. Financing life insurance for your key employees can also serve as a benefit attraction and means for retaining valued employees. Although premium finance exists primarily to enable people to purchase needed life insurance coverage, it can also be utilized to extract needed funds from an existing policy. Wealthy individuals and companies can both benefit from premium financing.

To learn more about how you or your company can benefit and utilize premium finance programs, please contact one of our specialists by calling toll free at (888) 511-5110 or emailing us at info@premiumfinancedirect.com.