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Premium Financing

When it comes to your life insurance premiums, you now have more choice.

While your financial strategy may require you to purchase a large amount of life insurance, you may have some reservations about paying your premiums using your existing assets or current cash flow. For example, you may believe you can earn more on your money than you would pay in loan interest. You may have illiquid assets, such as stocks, bonds, real estate or business assets, that you prefer not to access in order to fund your life insurance purchase. Or, perhaps you prefer to preserve your cash for other purposes.

Whatever your individual circumstances may be, you do have an alternative: Premium Financing. It’s an innovative financial strategy designed to help individuals buy large amounts of life insurance for personal or business purposes, while leaving cash or other assets in place — or available to be used in other ways.

So whether you are using life insurance for estate funding, philanthropic, or business planning purposes, you can now leverage the power of borrowed funds from a commercial lender to access the premium dollars you need — while you continue to acquire, grow, and preserve your other assets for your heirs or valued employees.

Who can benefit from premium financing?

  • Affluent individuals who want to purchase life insurance to leverage the value and tax advantages for personal estate planning
  • Business owners who don’t want to use existing assets, but do want to fund:
    • ––executive benefits
    • ––a buy-sell agreement
    • ––key person insurance

Leveraging the power of credit to pay your life insurance premiums may enable you to save on taxes — and keep your investment options open for other opportunities. And paying life insurance premiums with borrowed money can minimize your out-of-pocket outlay.

Premium financing benefits — tax advantages1 and more.

Premium financing offers several advantages:

  • Minimizes or helps avoid gift taxes.
  • Helps you retain assets and avoid the need to sell securities in a “down” market to raise cash for life insurance premium dollars.
  • Provides alternative options — if your annual gift tax exclusion or unified credit is exhausted, premium financing may be a good option.

Investors who would be candidates for Premium Financing are high-net-worth individuals needing larger amounts of life insurance, which is generally held in a life insurance trust. Because the required premiums usually exceed annual gift tax exclusions, Premium Financing, coupled with an exit strategy for the loan, allows those larger sums to be available in the trust while helping to minimize gift taxes.

Why whole life insurance?

Permanent life insurance is a financial vehicle that can provide guarantees, tax advantages, and leveraged benefits:

  • Guaranteed death benefit, typically income tax-free, to beneficiaries1
  • Guaranteed premium that never increases2
  • Cash values grow tax-deferred3
  • Policy can be used as collateral for a loan
  • May be self-completing in case of disability — if Waiver of Premium rider is available and has been selected4
  • Integrates easily with personal and business financial strategies

1Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
2All whole life insurance guarantees are subject to the timely payment of all required premiums and the claims-paying ability of the issuing insurance company.
3 Dividends are not guaranteed and are declared annually by Guardian’s Board of Directors.
4A Waiver of Premium rider waives the obligation for the policyholder to pay further premiums should he or she become totally disabled continuously for at least six months. This rider will incur an additional premium. See policy contract for additional details and requirements. Form No. 01-R2.