Types of Life Insurance Premium Financing
Life insurance
premium financing is one of the best
ways in which seniors can afford the life insurance they need. One of
the main problems that seniors face with life insurance is that they
are unable to bear the burden of annual premiums. High premium rates
can be a cause of concern even for wealthy seniors as much of their
wealth maybe in the form of non-income producing
assets.
But nowadays, seniors are using premium financing as
a method to manage the cash flow impact of buying life insurance.
Life insurance premium financing is a
great way for seniors to afford the life insurance they need. With
the help of premium financing, seniors can get high-value life
insurance policies and that too with lower out-of-pocket
expenditures.
Life insurance
premium financing can be divided in three categories i.e.,
full recourse financing, non
recourse premium finance, and hybrid financing. In
case a senior is not familiar with life insurance
premium financing, then it is a good idea to hire an agent to
help them in making a well-informed decision. A knowledgeable agent
will be able to present all the important alternatives for his
client's consideration.
Full recourse premium financing
requires substantial collateral from the senior and maybe preferred
by seniors who have large non-income producing assets. The duration
of these loans is life long or can be renewed over the years. This
form of premium financing is not preferred by many seniors as it
requires high collateral and personal guarantees.
Non
recourse premium finance was a unique method through which
seniors could get funds without the need of any collateral or
guarantee. Another thing about non recourse
premium finance was that it was only available to seniors over
70 years of age. But this type of financing was not accepted by
insurance companies as carriers assessed that it lead to settlements
99 times out of 100.
Hybrid premium financing was the new
category of financing devised by life insurance industry and in this
type of insurance
premium financing some personal collaterals or
guarantees are required but these are much less in comparison to a
full recourse loan. This type of financing is preferred by seniors as
it increases the affordability of life insurance. To be eligible for
hybrid premium financing, a senior must be over 70 years of age; and
the duration of this financing is minimum of five
years.
If you are looking for life premium
financing specialists, then browse
through www.mickelsonlife.com
.