Are the life insurance companies utilized in premium financing highly rated?
A3. Yes, the banks providing the premium finance loans typically work with only premier, A-rated life insurance carriers. Q4. What are the downsides to life insurance premium financing? A4. Like all life insurance, there are limits to the total amount of insurance that can be issued. If the total amount of life insurance issued equals the applicant’s insurable net worth, it will likely limit the ability of the applicant and others to purchase additional life insurance coverage on the applicant. If the applicant’s insurable net worth increases, additional life insurance capacity may exist. Other considerations when financing include the interest rate, repayment or exit strategies, net death benefit and taxation. Q5. Are applicants or the beneficiaries responsible in any way for the loan? A5. Yes. In fact, a promissory note is usually signed by a client’s trustee. Although beneficiaries are not responsible for the loan, the insured is clearly a party to the closing documents. Similar to
