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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 premium dollars 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 fees. 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 benefits 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 minimizes your out-of-pocket outlay.

Premium financing benefits — tax advantages and more.

Premium financing offers several specific 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.

Smart 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 minimizing and possibly eliminating gift taxes.

Why whole life insurance?

No other financial vehicle provides the guarantees, tax advantages, and leveraged benefits that permanent life insurance does:

  • Guaranteed death benefit, typically income tax-free to beneficiaries.1
  • Guaranteed premium that never goes up.1
  • Cash values grow tax-deferred.2
  • 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 selected.3
  • Integrates easily with personal and business financial strategies.

1All whole life insurance guarantees are subject to the timely payment of all required premiums and theclaims paying ability of the issuing insurance company.

2Dividends are not guaranteed and are declared annually by Guardian’s Board of Directors.

3Riders may incur additional costs.

The Guardian Life Insurance Company of America (Guardian), New York, NY, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax or legal advisor regarding yourindividual situation. 2015—3335 (Exp. 03/17)