Premium Financing:
The New Rave In Insurance

- Recovery Through Insurance News 

Premium Financing is the closest that anyone can get to a free life insurance. And high net worth individuals are recommending it if you want to leave your heirs with a huge sum of money as inheritance.

Insurance experts like PremFinance are calling it for what it actually is – premium financing. Strictly speaking, premium financing is not a new type of insurance, but it is a program where people can insure themselves with a huge coverage amount - usually in millions - without having to sell assets just to pay the premiums.

According to dictionary definition, “premium financing is the act of loaning funds to a person so he or she can have a life insurance policy.”

In real life, it is the premium financing companies that pay the insurance company the cost of the premiums. However, some insurance companies and insurance brokers also do it for their clients.

Any individual can insure himself in millions without having to take out a substantial amount of money from his own pocket. A premium financing company simply pays the premiums to the insurance company and then bills the policyholder, who then pays the premium financing company the loan. The loan payment is usually made in monthly installments.

At other premium financing companies, the loan is granted with no guarantees and with minimum collateral required. The total of the paid premiums plus the accumulated interest is simply deducted from the face amount of the policy when the insured dies. The balance is then given to his beneficiaries. 

For 50 year-old Harold Keyes, an insurance agent himself, premium financing is the best way for him to insure his family’s income when he is gone.

“I don’t want to leave my son and wife with just several thousands of dollars in insurance. I want to leave them with enough money to support the lifestyle they’re used to when I was alive. But I certainly don’t want to sell my stock portfolio just to pay the premiums on my policy,” he said.