Premium Financing

In recent years, Premium Financing has evolved as a valuable tool for high-net-worth individuals to purchase the appropriate amount of life insurance to address the needs of business planning and to help execute strategies to transfer wealth.

Premium Financing lets clients with significant insurance needs finance payments with little or no out-of-pocket costs and without the need to liquidate high-yielding assets to make policy payments. They can do this by using a combination of their life insurance policies and other assets as collateral.

Depending upon interest rates, policy crediting rates and charges and factors such as mortality, Premium Financing arrangements can be efficiently designed so that they may be potentially less expensive than paying life insurance premiums outright.

Types of Premium Financing

There are two distinct types of Premium Financing arrangements: traditional and hybrid. The primary differences between traditional and hybrid arrangements have to do with the collateral requirements for the loans.

Traditional Premium Financing

In traditional Premium Financing arrangements, lenders typically require the loan to be fully collateralized.
However, the cash surrender value of the life insurance policy purchased with the funds can be applied toward this collateralization requirement.

Traditional Premium Finance programs:

• Are typically used for clients up to age 70 • Are usually long-term loans, sometimes maintained until death of the client
• Involve the posting of “hard” collateral such as a letter of credit, securities or real estate

Hybrid Premium Financing

Hybrid Premium Financing arrangements typically require less collateral from the client. A well-designed and properly administered hybrid program can help certain clients meet their financial or estate-planning needs without having to liquidate personal assets at the outset. Collateral generally requires a combination of personal liability and/or pledged assets.
Hybrid Premium Finance programs: • Are used to finance policies on clients typically ages 70 to 85 • Are typically 10 years or less

• Involve the posting of more flexible and lower outside collateral, as well as a personal guarantee
  QLife has developed strong partnerships (including some proprietary arrangements) with all of the leading carrier-approved Premium Finance vendors. Q-Life offers the following Premium Finance services to its members: • Case analysis • Loan pricing and facilitation
• Network of experienced producers who will do joint work with other producers and advisors