Broker Check
Premium Financing 101

Premium Financing 101

March 06, 2023
When it comes to protecting your family from financial hardship after you pass away, life insurance is essential. However, life insurance coverage can be expensive and out of reach for many individuals and families. Fortunately, premium financing, if suitable, may be able to provide a more affordable way to obtain life insurance coverage.
 
Premium financing is a type of loan that allows individuals and families to purchase life insurance policies without having to pay the full premium upfront. Insteadthe loan covers the cost of the premium and the individual or family pays back the loan with interest over time. This can make life insurance more affordable, as the monthly loan payments are usually much lower than the cost of the policy.
 
Premium financing can also be beneficial in other ways. Many lenders offer flexible repayment terms and interest rates that may be lower than other types of loans. Additionally, individuals and families may beable to use the loan to cover additional costs associated with the life insurance policy, such as policy fees and taxes.
 
When evaluating premium financing for life insurance, individuals and families should consider the terms and conditions of the loan, as well as the cost and coverage of the policy. It is also important to compare different options from multiple lenders and to make sure that the loan can be paid back in a timely manner. 

This business strategy is offered and managed by an independent third party. No National Life Group company nor anyone acting on its behalf has evaluated the strategy or the suitability of using life insurance in connection with the strategy. No National Life Group company nor anyone acting on its behalf is authorized to make any representation regarding the suitability, effectiveness or legality of the strategy. Please consult with your own advisors regarding whether this strategy is appropriate for your situation.

Premium financing relies on internal policy funding to pay back the loan. This is not guaranteed and results may be more or less favorable than illustrated. The ability to internally fund a life insurance contract will be dependent upon the performance of the contract and is not guaranteed. If remaining policy values and scheduled premiums are insufficient, additional out-of-pocket payments may be needed to keep the policy in force or to repay the loan.

Premium financing is offered and administered independently of the insurance company that issues the policy. The insurance company is bound only by the terms of the life insurance contract.