Premium Financing Defined

Premium financing enables wealthy individuals with insurance needs to defer using their assets to fund a life policy. Clients can borrow the funds to pay premiums, thus leveraging and retaining their existing capital.

There are two general types of premium financing arrangements:

Traditional premium financing-The client fully collateralizes the loan, typically by posting cash, marketable securities, letters of credit, or life insurance policy cash values as collateral.
Hybrid premium financing-The client only partially collateralizes the loan or uses alternative forms of collateral, such as a personal guarantee.

Click here for an overview of all the programs' details

Benefits Of Premium Financing

Greater leverage of existing assets by keeping them invested rather than liquidating them to pay premiums
Reduced cash outlay in early years
Potential gift tax savings when the policy is owned by an irrevocable life insurance trust
Potential to purchase permanent rather than term insurance

Typically Prospects Share The Following Characteristics

Have a legitimate need for life insurance
Have a net worth of $5,000,000 or more
Have a need for financed premium greater than $100,000 per year
Understand the benefits of leveraging borrowed funds over liquidating their own
Meet life insurance policy underwriting guidelines

How Premium Financing Works

3 Mark Financial

3 Mark offers a full range of premium finance services including underwriting expertise, case design and management, multiple funding sources, and marketing support. In addition, our strong relationships with our life insurance carriers allow us to leverage their considerable resources and knowledge base, such as tax and estate planning attorneys, CPA's and other subject matter experts.

Given the complex and time-consuming nature of the cases involved in premium finance, it is critical to align yourself with an organization that has the necessary knowledge, expertise and resources to place these cases.