Cross Marketing Life Insurance with Property & Casualty

December 14, 2013


PFG Premium Finance Group, PFA Premium Finance Associates and NB National Brokerage have announced a strategic relationship. Through the agent marketing expertise of Bill Friend, President of PFG and PFA, both Property & Casualty as well as Life Insurance agents are moving towards diversifying their agencies for cross selling opportunities. "We offer manageable monthly payments for businesses and individuals," says Friend. "Businesses would rather have a monthly payment option rather than a lump sum payment. High net-worth individuals would rather put their money to use."

Todd Ruplinger of National Brokers welcomes the added business PFG and PFA brings. While PFG offers premium financing, NB offers multiple carrier and coverage options as well as high cash value policies. NB represents over 428 Term, Universal and Whole Life products.

Because of it complexity, premium financing is not for everyone. If you have financially sophisticated clients with skilled tax and legal advisors, this strategy may be appropriate for them. Also, your clients must meet certain eligibility requirements. To qualify for a premium financing arrangement, clients should demonstrate the following:

  • A need for life insurance.
  • Have a minimum net worth of $5,000,000 ($10,000,000 preferable) or more.
  • Have verifiable annual income in of $200,000 or more.
  • Have liquid assets sufficient to pledge as collateral for the loan.
  • Meet life insurance policy underwriting guidelines.
  • Commit to at least $1,000,000 in loans to provide premium.

How Premium Financing Works

The premium finance concept is simple your client borrows money to pay life insurance premiums. The actual transaction itself can be quite complex. For that reason it is crucial to involve legal and tax advisors in the process.

While each premium finance transaction is unique, every transaction consists of two separate financial instruments; a permanent cash value life insurance policy, and a loan. The process occurs in two steps:

  1. The Life Insurance Policy
    The initial life insurance application process is similar to any other life insurance application. The life insurance company will complete medical and financial underwriting to determine if your client qualifies for coverage.
  2. The Loan ApplicationAfter the policy is approved, a loan application is submitted to the lender for approval. The lender will review your client's credit and financial status and decide whether or not to make the premium loans.

    Once loan approval occurs your client's premium finance case is underway. The documents are then sent to your client's legal counsel to be executed, and the policy is funded.

Legal and Tax Considerations

Premium financing has tax implication in a number of areas including estate, gift, and income taxes. Your clients must rely on their own legal and tax advisors to review and explain the legal and tax issues for their specific case.

Premium Finance Group – Bill Friend – - 866.FRIEND.0

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