Premium Finance/ Life Settlements


Well designed, and properly administered, Premium Finance programs and Life Settlement strategies can be developed to meet Financial and Estate Planning needs. Such strategies are particularly useful in the Estate Planning and Business Succession marketplace.

Premium Finance

Premium Financing is a tool that enables clients to purchase needed Life Insurance, without significantly liquidating investments, or impacting current cash flow. This concept allows those qualified clients, to borrow funds to pay for their Life Insurance premiums using the policy and limited liquid assets as collateral.

Premium Financing is a complex and sophisticated process. Clients must rely on their legal and tax counsel to decide if such a tool is appropriate for their situation.

For additional information regarding premium finance, please read our Premium Finance FAQs.

Life Settlement

A Life Settlement is the sale of a Life Insurance policy to a 3rd party, issued on the life of a person whose life expectancy is greater than 2 years, and less than 12 years. The sale generally results in a value to the owner of an amount greater than the cash surrender value, yet less than the policy’s net death benefit.

Most types of Life Insurance policies can qualify; however, the most common are Universal Life, Whole Life and convertible Term Life.

For additional information regarding Life Settlements, please read our Life Settlement FAQs.

This material is for informational purpose only and is not meant as tax or legal advice. Please consult with your tax or legal advisor regarding your personal situation. NFP does not provide legal or tax advice.

To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

Due to the relatively short period of time the life settlement market has existed, the market is currently loosely regulated and the number of bidders for any marketed policy may be limited. Prior to selling a policy, the insured should consider factors such as the continued need for insurance coverage, whether there are plans to replace the existing policy with another policy, how the sale of the policy will impact estate plans, and the availability of new insurance as well as the cost of comparable coverage. Where relevant, tax implications must also be taken into consideration.

Loans and withdrawals from insurance policies may generate an income tax liability, reduce available cash value and reduce the death benefit or cause the policy to lapse. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax, a surrender charge, and if taken prior to age 59 ½, a 10% federal tax penalty may apply.

All guarantees are subject to the claims paying ability of the issuing insurance company.

Securities offered through Registered Representatives of NFP Securities, Inc., A Broker/Dealer and Member FINRA/SIPC Investment Advisory Services offered through Investment Advisory Representatives of NFP Securities, Inc. a Federally Registered Investment Advisor. IPS Advisors, Inc. is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp., the parent company of NFP Securities, Inc. This site is published for residents of the United States only. Registered representatives and investment advisor representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.

For additional information, please contact the NFP Securities, Inc. Compliance Department at 512.697.6000

An NFP Company

Website Development by Neutral Blue