Premium Finance. Premium financing for life insurance in New York, New Jersey and Miami

It is a strategy in which a bank lends the money to pay the premiums of a high-value policy, so you do not have to sell or touch your capital. It requires a net worth of at least $5 million and good credit: the bank sets that requirement.

That minimum applies only to Premium Finance. Our other solutions have no minimum net worth: FlexLife IUL for families and professionals, Driver annuities from $25,000 and G-Series Term as the lowest-cost entry point. Premium Finance carries risks such as rising rates or additional collateral calls.

Arbitrage happens when the policy's growth, linked to an index such as the S&P 500 with a 0% floor, exceeds the cost of the bank loan. The positive difference accrues to the client, but it is not guaranteed.

Indexed credits are subject to caps and participation rates, and the loan rate can rise. Past performance does not guarantee future results, which is why each structure is designed with conservative scenarios.

It is a policy design that spreads first-year commissions over 5 to 7 years, so the surrender value available from the start is higher and can serve as collateral with the bank.

A higher early surrender value reduces or removes the need for outside collateral in Premium Finance. Results depend on the policy design, the insurer and the state of issue.

Cash value grows tax-deferred and the death benefit generally passes to heirs free of income tax under current law. The exact treatment depends on the policy design and your situation.

Policy loans and withdrawals reduce cash value and the death benefit and may have tax consequences if the policy lapses. Always review it with a qualified tax advisor.

The pros: more coverage through the power of leverage, capital preserved for key investments, and you avoid the capital gains taxes that would be triggered if you sold appreciated assets to pay premiums. The cons are its risks: rising borrowing rates, changes in the value of the collateral, or policy performance below expectations.

That is why active, expert monitoring is required.

If borrowing rates rise, your overall cost increases and could delay repayment; if the value of the pledged assets changes, you may need to post additional collateral; and the policy may perform below expectations.

Like any advanced strategy involving leverage, there are risks to manage: each structure is designed with conservative scenarios and requires active, expert monitoring.