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.