Sponsored By
Trusts & Estates logo

Using Loans to Finance Life Insurance PremiumsUsing Loans to Finance Life Insurance Premiums

When and how to use this strategy

12 Min Read
Using Loans to Finance Life Insurance Premiums

Those purchasing significant death benefit life insurance often contemplate how to most efficiently pay policy premiums. Their aim is to maximize insurance benefits, pay as little as possible and minimize taxes. One option is to borrow from a commercial lender, finance company or private bank. This complex strategy, called “premium financing,” can be powerful but isn’t appropriate for all investors. Let’s take a closer look at this tool.

 

Premium Financing Basics

Premium financing is a strategy that involves taking a loan and using the proceeds to pay policy premiums (and, in some cases, the interest on the loan itself) during an insured’s lifetime. Marketable security assets and the net cash surrender value (CSV) of the underlying insuran...

Unlock All Access Premium Subscription

Get Trusts & Estates articles, digital editions, and an optional print subscription. Choose your subscription now and dive into expert insights today!

Already Subscribed?

About the Authors

Rebecca R. Ryan

Rebecca R. Ryan is head of private banking, life insurance lending at BNY Mellon Wealth Management in Chicago.

 

Richard L. Harris

Greenberg & Rapp Financial Group

Richard L. Harris is the managing member of Richard L. Harris LLC, a life insurance sales and consulting firm devoted to helping the very wealthy and their professional advisors deal with issues regarding life insurance. He works as a back office life insurance expert for many accountants, attorneys, and trust officers. With 40 years experience, Richard is a nationally recognized expert in the very advanced areas of life insurance. He brings together expertise and cutting edge ideas in designing and implementing solutions incorporating life insurance that integrate and address the issues at hand. Apart from acting as a life insurance strategist and purchasing agent for life insurance for the very wealthy, he is often consulted about fixing or improving advanced strategies using life insurance that have become problematic because of legislation, poor performance, or change in circumstances. Richard consults on proposed advanced strategies using life insurance providing second opinions on the viability of the transactions. He also provides litigation support both forensically and strategically and serves as an expert witness regarding sophisticated life insurance transactions. Richard is a graduate of Long Island University where he majored in Accounting and Literature. He holds the professional designations of Chartered Life Underwriter, Registered Trust and Estate Practitioner, and Accredited Estate Planner. He is Chair of the Insurance Committee of Trusts & Estates Magazine, on the Editorial Advisory Board of Wealth Strategies Journal, a Contributing Editor to Private Wealth Magazine and is listed in Who's Who in Finance and Industry. He also serves on the Board of the Northern New Jersey Society of Financial Services Professionals and the Advisory Board of HighCap Financial.