National Association of Insurance and Financial Advisors
What is Premium Financing?
Premium Financing is actually pretty simple:
Instead of paying cash to fund a life insurance policy, a bank lends the money to pay the premium and the bank is later repaid from the death benefit.
This allows the purchaser to acquire an insurance policy without having to actually put up cash.
The bank's loan can either be collateralized by other assets of the purchaser or not, although obviously the arrangement costs more if it is not collateralized.
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