Premium Finance – 5 Benefits for Business Owners

Life insurance today is more than just paying out a death benefit. These insurance policies offer a tremendous amount of living benefits while the policy holder is alive than ever before in history. For business owners and high net-worth individuals, the benefits of premium financing of life insurance can be amazing.

Benefit #1 Tax-Free Loan:

Life insurance premium finance is a loan made to individuals and companies who want to purchase and fund large amounts of tax-free cash value inside a life insurance policy. Because businesses do not pay income taxes on loans, the money the individual or company receives can go directly into the life insurance policy and be taken out as cash at a later date, tax free. In addition to tax free loans and tax free withdrawals, business owners can write off on their taxes the loan interest.

Benefit #2 Tax-Free Income Stream:

Once the policy loan is paid back, the business owner can take out the money from their life insurance policy as tax free withdrawals. Money taken out of the insurance policy is considered a policy loan and therefore is not subject to taxation by the IRS. Usually, most individuals can start taking out money from their insurance policies is as little as 5 years.

Benefit #3 Asset Protection:

In most states, the cash value build up inside annuities and life insurance is protected from creditors. If you are ever sued, these assets will not show up on any data base that is connected with you personally. Also, most states have a guarantee association that covers cash value up to $250,000. These protections will ensure that the huge amounts of money you have inside of your life insurance policy is protected by risk and law.

Benefit #4 Never Lose Value:

The benefits as stated above are meaningless unless the underlying life insurance vehicle has some type of guarantee to protect the policy owner from stock market losses. This is achieved by using a whole life or indexed universal insurance (IUL) policy. We recommend using an indexed universal life insurance policy because the upside potential of 12-15% yearly cap and a minimum guarantee of 1% is very attractive.

Some indexed universal insurance policies offer critical and chronic illness riders. These riders are usually offered at no additional cost and they can provide for additional income in case of a medical situation. If you are ever terminally ill, you can access up to 90% of the death benefit to use while you are alive.

Benefit #5 Creative Living Buyouts

When business owners decide it is time to sell their business, they are confronted with the reality that their buyers may not be able to find financing. Most business owners will have to resort to some type of self-financing where they will help the new owner finance the purchase of the business.

By using the premium financing method, it does not matter if the new owner runs the business into the ground or if business is good or bad. With our method of financing you would have taken out your money and there is nothing at all to worry about.

Build and Maintain Financial Wealth

There are a few steps to building and maintaining wealth. They must be followed to achieve financial success for you, your family and your heirs. The following gems will help you build wealth and keep it for your lifetime, and for your family’s.

Spend less than you earn

I have seen people who earn $100,000 a year and spend $110,000. They will never build wealth. I have seen people worth over $5 million spend much, much more than they earn and lose everything.

I have seen people earn $60,000 a year, but save $10,000 a year. They are on the path to building wealth (although at an admittedly slow pace.)

Give the IRS as little as possible

Utilize all tax saving techniques available. This is difficult, because most accountants are not familiar with unique tax saving strategies like cash balance plans, K plans, and dash plans, which substantially reduce income taxes while building money for the future.

Many frustrated taxpayers have expressed the opinion accountants are working for the IRS. Most accountants deny this and would argue they represent their clients and are not servants of the IRS.

However, the government has been relentlessly extending varied tax penalty provisions applicable to accountants and advisors to the point where advisors and accountants are caught in a dilemma.

Overly aggressive representation of clients can easily put an accountant or advisor into a position where they can be subject to varied penalties, which might even result in the loss of their license to practice law or accounting in addition to some significant financial penalties.


Develop and follow a sound long-term investment strategy. Too many people invest based on what they have read or who they have talked to recently.

They often sell out of the stock market after it has dropped. They purchase real estate after the market has gone up for years. They invest in the latest get-rich-quick strategy they saw on an infomercial.

Find ways to reduce taxes and insurance costs with health savings accounts and the insurance swapout process IM. Investigate senior settlements as a way to sell existing life insurance policies and make a substantial profit.

Once you have acquired wealth, pass it to the next generation with trust-owned premium-financed life insurance; A great way to pay for substantial amounts of life insurance at a huge discount.

A 70-year-old male in average health can purchase $2,000,000 of permanent cash value life insurance with an approximate out-of-pocket outlay of about $10,000 per year. If done properly, the proceeds are income and estate tax free.

How a Financial Advisor Can Help Guide You

Most people have dreams and life goals. Whether you want to send your kid to an Ivy League school, buy a vacation home in Italy, or retire comfortably, you’re going to need money to do it. Careful planning aided by a financial advisor can help you get there by working with you on the challenges you may face on your way to your dream.

What Does a Financial Advisor Do?

These professionals can help you to set realistic personal goals and assess your current economic health by examining your assets, investments, insurance plans, and more. They’ll identify your strengths and weaknesses and help you overcome and build on them. Then, they’ll help you put that plan into action and monitor its progress. Most importantly, they’ll work with the changes you experience in life. Your monetary planner should understand when unexpected expenses come up and will help you to ensure that no real damage is done to your credit or bank account.

When Should I Get a Financial Advisor?

For many people, the decision to hire a professional to help them with their assets is precipitated by a particular event that calls for guidance. These include:

– Planning for a wedding or divorce
– Preparing for the arrival of a child
– Handling an inheritance of a large amount of money or other sorts of windfalls
– Facing a crisis like layoff or serious illness
– Funding children’s education
– Buying or selling a business
– Caring for aging parents

Even if you’re not currently in the midst of one of the aforementioned situations, it’s always good to have professional advice when it comes to all things monetary.

How Do I Find a Planner?

Begin your search by asking friends, family members, and business associates if they know any financial planners that they can recommend. Accountants, attorneys, bankers, and insurance agents can be excellent resources when looking for recommendations. You can also search online for lists of licensed professionals in your area. Once you start looking, you’ll want to find an individual that you can feel comfortable with, as this is a very personal relationship. Your planner should have ethical behavior, high professional standards, and put your needs and interests first. You’ll also want to find someone that specializes in what you’re looking for help with. Many have minimum asset and income requirements, so you should keep that in mind. It’s a good idea to interview at least three people before making your choice.

Take the time to find the right financial advisor for you. Although some dreams may take a little longer to accomplish, there is usually a way if you have the right team behind you. Investing in someone to help you achieve those dreams will always be a smart fiscal move