Cash investments are the accepted collateral. This is not suitable for the client that has primarily illiquid funds such as real estate. Additionally the collateralized investments may be held by the insured's investment team as long as the collateral money is pledged annually with third party verification of the funds. Non-Recourse Premium Finance & Hybrid Premium Finance are now available.Traditional finance is particularly effective for clients who have a large but illiquid net worth. The client may have an exit strategy using other assets in the estate. Traditional financing arrangements are generally purchased for estate liquidity needs and offer the most advantageous loan rates, fees, and spreads. "Traditional" Recourse Premium Finance - The client enters a fully collateralized loan arrangement with the intention of holding the life insurance policy to maturity.Types of life insurance premium financing Premium financing is popular when interest rates are low. Typically, clients that engage in this transaction are age 29 to 75 with net worth of $5MM or greater. The premium finance company then pays the insurance premium and bills the individual or company, usually in monthly installments, for the cost of the loan. The loan arrangement may last from one year to the life of the policy. To finance a premium, the individual or company requesting insurance must sign a premium finance agreement with the premium finance company. Premium financing is mainly devoted to financing life insurance which differs from property and casualty insurance. Premium finance loans are often provided by a third party finance entity known as a premium financing company however insurance companies and insurance brokerages occasionally provide premium financing services through premium finance platforms. Premium financing is the lending of funds to a person or company to cover the cost of an insurance premium.
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