Premium Financing

{2 minutes to read}  Today, I want to talk about a strategy called Premium Financing. Premium financing is for high-net-worth people who want to purchase permanent life insurance for estate planning purposes. The insurance would provide funds to pay estate taxes, so that the family doesn’t have to liquidate assets such as real estate, businesses, or even stocks, at a time when it might not be the best time to sell.

Premium financing is a concept that has taken off because we are in an extended period where we’ve had low-interest rates. Many people believe that these low rates will continue for some time and, to further that thought, a lot of the banks are now offering loans that have fixed rates for two, three, or four years, because of the belief that interest rates are most likely not going up in the near future.

The right type of people for this concept are those that have their money working for them in:

• Businesses,
• Real Estate,
• Equities and Private Equities,
• Mutual funds,
• Stocks, and
• Monies

that are managed, and earning a rate of return that is better than what they can buy money at. For instance, if you wanted to buy a policy and not pay the premium, you could potentially get a bank to lend you the money for the premium at maybe 2, 3, or 4%, while your money continues to grow at its current rate. So, if your investments are growing at 8% or 10%, or your hedge-fund, real estate, or portfolio is growing at a rate higher than what you could buy money for, Premium Financing may be a very good strategy for you to consider.

We are doing a tremendous amount of business with this concept since interest rates are continuing to stay up. That scenario is a very good opportunity for people to take advantage of what might be a very conservative arbitrage, the difference between what your business, investments, or portfolio is doing versus what it would take to pay for those premiums.

If you’d like to learn more about the strategy of using premium financing in your estate plan, let me know. We’d be happy to discuss and help you with it.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.American Portfolios Financial Services, Inc.(APFS) and American Portfolios Advisors, Inc.(APA) are not affiliated with any other named business entities mentioned.