Affluent leverage ("Premium Financing")
The affluent individual or family with considerable wealth faces many risks. These risks often subject wealth to liquidity exposure. The wealthy often buy many forms of life insurance in an effort to mitigate these risks.
But obtaining the necessary coverage using this approach requires exorbitant out-of-pocket premium payments. To avoid having to spend on these large premiums, you may deploy an alternative payment strategy.
The most intelligent alternative strategy is premium financing.
Premium financing preserves capital that would otherwise be liquidated to satisfy large insurance premiums. It is a highly effective means of structuring large life insurance policies to maximize assets. In fact, premium financing has proven so effective that it is often incorporated into the financial planning process.
Affluent individuals want to maximize the performance of any asset. Life insurance assets are no different. What premium financing does is enhance the performance of your life insurance asset.
The leverage that the strategy builds will generally enhance the yield of both the death benefit and the insurance policy’s cash values, creating more assets.