What Professionals Need to Know About Borrowing to Finance Life Insurance Premiums
Many wealthy individuals are being approached to buy life insurance by borrowing the money to pay premiums (known as “Premium Finance”.) While there are merits to the transaction, the concept is often over-sold. Illustrations for the program sometimes appear to offer “free” insurance. The mechanics and inner workings are intricate, especially when the insurance is going to be used in estate planning. If one of your clients approaches you about this, other than calling an expert in the area to vet it for you, here are some things to check out.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.