Ask Terry Questions Premium Financed LIfe Insurance

Premium Financed LIfe Insurance

By Terry Savage on October 12, 2018 | Financial Planning / Retirement

We have a large nest egg with 2 children in their 20’s. What the investment advisor is pushing is an insurance policy of $20M which will be financed by a bank, called Premium Financed Life Insurance. This way the premiums will not count against our portable estate tax limit. After roughly 17 years the bank will be paid off completely with the cash value. The cash value will appreciate with an annuity-like capped return tied into the S&P500. He claims its historical return is 6.7%. It seems it may work well in an environment where rates are low and bull markets roar. It is unlikely this scenario will continue for 17 more years. What are the pros and cons to this strategy?

Terry Says

I think your “investment advisor” will get rich from the huge commission on this product. And you will be sorry. Find a new advisor who is not motivated by commissions.

Sometime soon you’ll have grandchildren and your wealth distribution problems will be solved. In the meantime, consult an estate planning attorney not an insurance salesman!

Recent Financial Planning / Retirement Questions



a personal
finance question