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The goal of life insurance premium financing is to allow high net worth individuals to purchase large life insurance policies without having to liquidate substantial assets in order to pay the premiums. Where life insurance premium financing goes according to plan, the borrower makes payments on the loan until either the debt is satisfied or the insured passes away and the balance of the loan is paid off with part of the insurance proceeds.

However, these programs are very risky. First, interest rates on the loans used to purchase the policies often have a variable interest rate. Therefore, as interest rates increase, monthly interest payments on the loan can skyrocket.

Second, borrowers often have to periodically re-qualify for the loan. If the value of the collateral provided falls below a certain value, the borrower may have to provide additional collateral, or otherwise face the loan becoming due or renewal at a higher rate.

Third, if the life insurance policy’s cash surrender value underperforms, the loan balance could exceed the value of the provided collateral, requiring the borrower to put forth even more collateral to make up the difference. Additionally, if the death benefit of the policy does not grow, the estate of a borrower may have to repay the loan if the death benefit does not cover the remaining balance.

Peiffer Wolf is currently investigating claims against Julian Movsesian and Succession Capital Alliance related to life insurance premium financing. If you have financed life insurance premiums with Julian Movsesian and/or Succession Capital, Contact Us by calling 585-310-5140 or by filling out an online Contact Form for a FREE Consultation.

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