Life Insurance Premium Financing

[insureagent]

Theres been more on life insurance premium financing Ive been reading about in Life Selling and stuff lately. Basically where a 60+ something year old can buy a life policy, pledge some collateral and finance the premium for the next two years, 2 years premium paid by another third entity. Now what Im wondering is if you can get a life settlement company and you can, to buy the policy outside the two year clause, would'nt this be a sweet way for a 70 year old to make some easy money?

Any body run these numbers and play with them a little bit?

 

[HomeService]

I used to hear stories of a guy in the early 1990's who was a life agent and who used to somehow get financing for big million dollar life policies on college kids who were to be future doctors and lawyers, and would sell to them at a young age to save premium, and while they were healthy, and get it financed because they were broke college kids, but were someday to be wealthy. I do not know what ever happened to this guy. I never could figure out why he did not just go after 30 and 40 something doctors who were making money.

 

[Mr. Bill]

Typically the illustrations are for EIUL. You have to run the numbers with some years at zero gains. Watch what happens. It can get pretty darn ugly. Talk with an FMO and ask them to illustrate.

 

[fjman]

I met a PF rep from TransAmerica and they generally only look for premiums of atleast 100K, although average is closer 300K. They offer some excellent ROP UL and EIUL the can work well for PF. The two most important things being suitabilty and the exit strategy for the client. Now if I can just find those clients to sell quarter million dollar premiums too....

While a life settlement is often the likely exit strategy, some settlement providers will not buy PF insurance. The "free" insurance with a two year flip is not a new concept but one that is under scrutiny. STOLI is getting hit by some serious regulation (probably a good thing for the insurance industry). Some states are now requiring a 5 year wait before the sale of a policy (probably a bad thing for the insurance industry).

If you haven't picked up on it yet, I like life settlements!

 

[fjman]

The numbers can be decent but the loan interest and fees can build up substantially and degrade the clients return. You will likely make quite a bit more than the client. Buy lots of E&O and be very transparent!