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Advantages of Refinancing

Refinancing a premium finance loan can provide various advantages.  By refinancing, one can obtain a lower interest rate, thereby reducing the overall cost of financing.  This can lead to significant savings for the individual or company holding the loan.  Additionally, refinancing can allow the borrower to extend the loan term.  In turn, this can improve cash flow and provide the borrower with greater financial flexibility.

Lower Interest Rates:

One of the most significant advantages of refinancing a loan is the ability to secure a lower interest rate.  With the uncertainty in today’s interest rate environment, refinancing a premium finance loan to a lower rate could reduce overall interest charges, potentially saving borrowers thousands of dollars over the life of the loan, allowing borrowers to redirect funds toward other important goals.  Lower interest rates also mean borrowers may be able to pay off their loans faster and redirect financial resources towards alternative productive investments.

Improved Cash Flow:

Refinancing a premium finance loan can also help improve cash flow by reducing possible payments and freeing up more money for other expenses.

Flexible repayment terms:

Refinancing a premium finance loan can also provide greater flexibility with repayment terms.  Borrowers can choose shorter or longer repayment terms depending on their cash flow, financial goals, and other investment priorities.

Consolidating debt:

Refinancing a premium finance loan can be used to consolidate multiple loans into a single repayment plan, which may streamline the debt repayment process and reduce administrative costs associated with managing multiple loans.

Overall, the advantages of refinancing a premium finance loan are numerous, from cost savings, to greater financial flexibility and streamlined debt repayment, refinancing can be a wise choice for many borrowers.  By refinancing, individuals and business can take advantage of these benefits and improve their financial stability and success. However, as with any financial decision, it is important to carefully consider the potential risks and benefits before proceeding.  Insurative Risk Solutions US, Inc. has extensive experience in finding the best options for our clients, contact us at 877-281-1311 or info@insurativeus.com.

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Utilizing Life Insurance Benefits While Your Living

Accelerated benefit riders (ABRs) have become increasingly popular in recent years as they provide life insurance policyholders with the option to access a portion of their policy’s death benefit while still alive.

The advantages of ABRs are numerous and can have a significant impact on policyholders and their families.

  • Flexibility in managing medical expenses:

ABRs provide a safety net for policyholders who are diagnosed with a terminal illness, chronic or critical illness. If the policyholder is unable to continue working and can’t pay medical expenses, ABRs will provide a lump sum payment to help cover medical bills or other expenses. This can be an invaluable asset, especially for those who need to manage the costs of long-term medical treatment.

  • Peace of mind for loved ones:

With an ABR, the policyholder can rest assured that their loved ones can take care of their financial needs. They don’t have to worry about leaving behind a financial burden, as the ABR can provide much-needed financial assistance to their loved ones.

  • Financial help during the waiting period:

The waiting period for social security or other disability benefits can be a long one. However, with ABRs, policyholders can access their death benefits far more quickly. This can help those who are waiting for other benefits, as well as those who need immediate financial assistance during times of crisis.

  • Help to maintain independence:

Maintaining independence is important to many people. ABRs help to preserve the policyholder’s financial independence during times of hardship. Instead of depending on their loved ones for financial assistance, policyholders can use the ABR payment to maintain their independence and dignity.

  • The ability to use the funds as desired:

ABRs provide policyholders with the flexibility to use the lump sum payment as they see fit. For example, they can use the money to pay for medical treatments, cover other expenses, or provide additional support for their loved ones.

  • Tax advantages:

In addition to providing financial security and greater choice in terms of healthcare options, ABRs can also offer tax advantages. Because the funds received from an ABR are typically considered accelerated death benefits, they are generally tax-free. This can help policyholders avoid taxes on the funds they receive, potentially saving them thousands of dollars in taxes.

Overall, ABRs provide a valuable way for policyholders to protect themselves and their families from the financial burden of a serious illness or disability.

They provide a safety net for those diagnosed with critical illness, offer peace of mind for loved ones, help to bridge the gap between waiting for disability benefits, maintain independence, and provide flexibility in how the funds can be used. It’s worth considering ABRs when purchasing a life insurance policy to get the most out of your coverage.

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Why Life Insurance is an Essential Part of a Financial Plan

Essentials of Life Insurance

When it comes to managing your financial security and protecting your family, there’s no substitute for life insurance. It is an essential component of any financial plan and provides a solid foundation for you and your loved ones in the event of a tragedy.

The Benefits of Life Insurance

With life insurance you are protecting something that no one can replace, yourself and your loved ones.

One major benefit to having life insurance is that it can provide your family with the financial means to pay off debts, such as mortgages, in the event of death or disability. This ensures that your loved ones are not left with unmanageable debt in their time of mourning. Additionally, life insurance can provide money for college tuition or other expenses for your children if you were to die prematurely.

Another benefit to having life insurance policies is that they may also include a savings component called “cash value” which can be used to finance large purchases like cars and homes or cover unexpected expenses such as medical bills without having to take out loans or dip into savings accounts. This feature makes life insurance more than just protection against death; it’s also a way to save money over time.

There are numerous benefits to having life insurance in place, including: providing financial stability in the event of your untimely death; helping cover final expenses; easing the burden on loved ones during difficult times; providing an inheritance for children; covering business debts; protecting against the loss of income from death or disability; protecting against estate taxes; and more.

Peace of Mind

While many people like to think about the present and their current needs, it is important to consider what the future holds as well.  Life insurance is an essential part of any comprehensive financial plan. It protects you, your family, and all that you have worked hard to build over time—providing peace of mind today and ensuring that future generations are taken care of in case something should happen to you tomorrow. By understanding how life insurance works and what benefits it provides, clients can make informed decisions about their future security and that of their families.  Insurative Risk Solutions US, Inc. is available to assist with customizing life insurance policies unique to each client no matter their stage of life or individual needs, call us at 877-281-1311 or email us at info@insurativeus.com.

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Premium Financed Corporate Split Dollar: Two Strategies, One Great Outcome

Corporate Split Dollar Life Insurance is not a new financial strategy. Premium Financed Life Insurance is also not a new financial strategy.  When the two advanced strategies are combined, they can become a powerful tool for a business to reward and retain key employees.  Let’s dig in to learn more about the advantages of these two life insurance tools. 

What is Corporate Split Dollar Life Insurance?

As the name implies most Corporate Split Dollar Life Insurance transactions are used in a business setting between an employer and employee.  By using this strategy the cost of the life insurance and the benefits offered through the policy can be shared by the employer and employee.  The life insurance policy should be a permanent policy that accumulates cash surrender value.

The Corporate Split Dollar is not the life insurance policy itself; it is a contract between the employer and the employee.  This contract outlines the following:

  • How the premium costs of the life insurance policy will be shared.
  • How the cash surrender value of the insurance policy will be shared.
  • How the death benefit of the insurance policy will be shared.
  • How long the contract will be in effect.
  • How the contract will be terminated.

This arrangement can be used to provide additional compensation or retirement benefits for employees, as well as providing tax advantages for both.  Corporate Split Dollar contracts are legal documents and should involve an attorney or tax advisor during the creation of the documents.

Defining Life Insurance Premium Financing

With premium financing, a person and/or entity purchases a life insurance policy through a life insurance carrier and obtains a loan from a lender in order to pay the premiums on the policy.  In order to secure the loan, collateral is required.  In most cases, the cash value of the life insurance policy can partially collateralize the premium loan.  As with most loans, the lender charges interest.  With premium financing, a borrower may be responsible for paying this interest to the lender.  The loan will be repaid to the lender on terms agreed to by the business or from the cash benefit of the insurance policy itself.  

The Combo: Stronger Together

When you combine Corporate Split Dollar and Premium Financing the  employer (or a created Irrevocable Life Insurance Trust (ILIT)) owns the life insurance policy and borrows money from the Lender to pay the insurance premiums.  The lender places a collateral assignment over the policy for the duration of the loan terms.  This allows the employer to retain capital that can be used in other parts of the business while also giving them the ability to retain or attract top talent.

The employee makes annual interest payments to the premium financed loan.  The benefits for the employee are life insurance coverage and the advantages the policy provides, including the cash surrender value and the death benefit.

Both Corporate Split Dollar Contracts and Premium Financing arrangements are powerful tools, but if the appropriate professionals are involved the agreements can prove to be lucrative for both employers and employees.

Insurative Premium Finance Massachusetts, Inc. can assist in navigating these agreements.  Contact us at 877-281-1311 or info@insurativeus.com