Premium Financing (P&C)   What Types of Premium Financing are there? 

Premium financing is available to those who want to purchase a insurance policy but cannot afford the premium. The insured can get premium financing, but it often comes with high costs like fees and high interest rates. There are a few different types of options out there to choose from, but its best to get the direction of a professional (ie an attorney that has experience with premium financing) before embarking on a premium financing option.

Recourse premium financing offers lower loan rates, fees, and spreads, but requires the policy holder to keep the life insurance policy until it matures. This is beneficial for clients that do not have easily liquidated assets but have a high net worth.

A Non-Recourse premium finance is financed under things like an Irrevocable Life Insurance Trust or and LLC. This means there is not liability to the insured or the estate so the policy is the collateral. If for some reason the loan is not re-paid prior to the maturity of the loan then the lender can foreclose on the policy and assume ownership of the life insurance.

A hybrid financing option is also available, but is designed for short term purposes and normally the loan is re-financed at the end of the loan term to a longer term loan.