Published on March 6, 2009

Types of Life Insurance Premium Financing

Life insurance premium financing is one of the best ways in which seniors can afford the life insurance they need. One of the main problems that seniors face with life insurance is that they are unable to bear the burden of annual premiums. High premium rates can be a cause of concern even for wealthy seniors as much of their wealth maybe in the form of non-income producing assets.

But nowadays, seniors are using premium financing as a method to manage the cash flow impact of buying life insurance. Life insurance premium financing is a great way for seniors to afford the life insurance they need. With the help of premium financing, seniors can get high-value life insurance policies and that too with lower out-of-pocket expenditures.

Life insurance premium financing can be divided in three categories i.e., full recourse financing, non recourse premium finance, and hybrid financing. In case a senior is not familiar with life insurance premium financing, then it is a good idea to hire an agent to help them in making a well-informed decision. A knowledgeable agent will be able to present all the important alternatives for his client's consideration.

Full recourse premium financing requires substantial collateral from the senior and maybe preferred by seniors who have large non-income producing assets. The duration of these loans is life long or can be renewed over the years. This form of premium financing is not preferred by many seniors as it requires high collateral and personal guarantees.

Non recourse premium finance was a unique method through which seniors could get funds without the need of any collateral or guarantee. Another thing about non recourse premium finance was that it was only available to seniors over 70 years of age. But this type of financing was not accepted by insurance companies as carriers assessed that it lead to settlements 99 times out of 100.

Hybrid premium financing was the new category of financing devised by life insurance industry and in this type of insurance premium financing some personal collaterals or guarantees are required but these are much less in comparison to a full recourse loan. This type of financing is preferred by seniors as it increases the affordability of life insurance. To be eligible for hybrid premium financing, a senior must be over 70 years of age; and the duration of this financing is minimum of five years.

If you are looking for life premium financing specialists, then browse through www.mickelsonlife.com .