A Simple Overview for High Income Individuals and Families
Premium financing is a planning strategy used by high income individuals to create long term liquidity and estate protection, without unnecessarily liquidating assets.
It is not a product.
It is a structure.
When designed correctly, premium financing can help qualified individuals preserve capital while implementing permanent life insurance as part of a broader wealth strategy.
What Is Premium Financing?
Premium financing is the use of bank financing to pay premiums on a life insurance policy rather than using personal cash.
Instead of paying large premiums out of pocket, a qualified individual:
Obtains a loan from a lending institution
Uses the loan to fund premiums
Posts collateral as required
maintains flexibility with personal capital
Why Some Families Use This Strategy
Premium financing may be considered when:
assets are illiquid or concentrated
selling assets would trigger taxes
liquidity is needed for estate planning
long term wealth transfer is a priority
capital efficiency matters
For many families, the question is not whether they can afford the premiums, but whether using cash is the best use of capital.
How the Strategy Works (High Level)
Every structure is customized based on income, net worth, collateral, and long term goals.
1
A permanent life insurance policy is designed
2
A lending institution provides financing for premiums
3
Collateral is pledged based on bank requirements
4
Interest is paid on the loan
5
The policy is monitored over time
6
At death or exit, the loan is repaid and remaining benefits pass to beneficiaries
Common Uses of Premium Financing
Premium financing is often used to:
create estate liquidity
fund life insurance inside trusts
reduce pressure to sell assets
support generational wealth transfer
complement business and investment planning
Important Considerations & Risks
Premium financing is not risk free.
Proper planning requires awareness of:
interest rate fluctuations
collateral requirements
policy performance assumptions
market volatility
exit strategy design
This is why careful structuring and ongoing monitoring are essential.
If the risk profile does not make sense, the strategy should not be implemented.
Who Typically Qualifies
Premium financing is generally considered for individuals who:
It is not appropriate for short term planning or speculative goals.
earn $300,000+ annually
have $2 million+ net worth
possess sufficient liquidity or collateral
have a long term planning horizon
value professional coordination
What Premium Financing Is NOT
To avoid confusion, premium financing is not:
a guaranteed investment
a short term strategy
a way to avoid taxes illegall
a one size fits-all solution
suitable for everyone
Our Role
At Strategic Premium Finance, our role is to:
evaluate suitability
design conservative structures
coordinate with advisors
explain risks clearly
monitor the strategy over time
We believe clarity always comes before implementation.
Start With Understanding
Before moving forward, the most important step is understanding whether this approach aligns with your financial picture.
We’ll help you determine:
- if premium financing makes sense
- what alternatives exist
- how risk would be managed
- whether a strategy should be explored further
- No pressure.
- No obligation.
- Just clarity.