Premium financing is a sophisticated strategy that allows high-net-worth individuals to fund large life insurance premiums using bank-financed loans instead of tying up personal capital. Due to its flexible funding requirements and strong accumulation potential, Indexed Universal Life (IUL) is one of the most commonly used policy types for premium financed designs.
A third-party lender finances the premium payments on the policy.
As cash value builds, it reduces the client’s required outside collateral.
Depending on the structure, this may be paid annually or rolled into the loan.
If the policy performs well, cash value growth may exceed the borrowing cost over the long term.
Loans may be repaid through:
Living Equity Group works with lenders and advisors to model multiple repayment pathways.
The index-linked crediting mechanism supports competitive cash value growth.
The zero-floor can help mitigate performance risk in down-market years.
Clients can structure increasing, levelized, or overfunded premium patterns.
Premium financing is often paired with high-face-amount policies for liquidity, wealth transfer, or trust funding.
This strategy is designed for clients who:
Premium financing is powerful but introduces leverage risk. Key considerations include:
Professional modeling and ongoing monitoring are essential.
When managed properly, premium financing can amplify IUL’s accumulation potential while preserving client liquidity. However, it requires disciplined oversight and a conservative approach to design.
Exploring premium financing for your IUL strategy?
Our advanced case design team can model multiple carriers, lenders, and long-term repayment options.
→ Request a Premium Finance Review
