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The World of Premium Financing with Michael Rothman

Episode 59:

For us, financial planning has three essential components: flexibility, the ability to customize for your specific needs, and the ability for you to control how your money grows.

In our most recent episode, we unpack one of our favorite financial tools—whole life insurance—in a way that carries through on those values of flexibility, custom-fit, and control. We’re talking with guest Michael Rothman about premium financing; a system where you can borrow the life insurance premium to pay for that policy and then you pay interest on the money that you just borrowed. Now especially, high net worth people can leverage these low-interest rates environments and gain the death benefit that they need, the cash value that can grow for them, while paying a small interest rate to do it.

Michael has an in-depth understanding of advanced tax and estate planning techniques as well as sophisticated leveraging and wealth preservation strategies. He works with Succession Capital out of California. The firm was formed in 2004 to address a void in the market: understanding and communicating about life insurance with advisors and high net worth individuals and business owners.

Michael joined Succession Capital in 2008 and is responsible for business development on a national level. He oversees all major initiatives at SCA. He’s an accomplished speaker throughout the financial industry and has his CFP designation. Michael is responsible for case design, presentation, and implementation of these advanced planning concepts.

What You Will Learn in this Episode:

  • What premium financing is
  • Who premium financing is for
  • New ways to use life insurance to accomplish your goals
  • The many ways the cash value of your life insurance is protected
  • How to use long term loans just like big corporations do
  • How to finance life insurance premiums the same way you would for property
  • The tax and gift planning ramifications of premium financing for life insurance
  • Why premium financing makes sense even when interest rates rise
“Through premium financing, you can retain the capital that otherwise would be used to pay life insurance premiums using other investments.” – Michael Rothman Click To Tweet “Whole life policies are products that cannot lose money. They get conservative, consistent rates of return, and right now you can borrow against them at incredibly low-interest rates.” – Michael Rothman Click To Tweet “As long as our client has a strong net worth, they can borrow millions of dollars to put into these policies and let them grow on a tax-free basis to support a tax-free death benefit that is typically millions and millions of dollars above the amount… Click To Tweet “If you already own an insurance policy, you have even better opportunities by loaning the premiums that you are already paying and taking your overall insurance portfolio to the next level.” – Michael Rothman Click To Tweet “For high net worth individuals, the retained capital in premium financing is how they're paying much less in interest than they would have paid in premiums that are now retained in their pocket to grow in other investments.” – Michael Rothman Click To Tweet “Being able to pay less for premiums also lends itself to tax and gift planning. There are so many layers of benefit to premium financing.” – Michael Rothman Click To Tweet “The general positive correlation between interest rates and return rates, the retained capital, and the fact that all of this is done in a tax-free environment makes premium financing an attractive option.” – Michael Rothman Click To Tweet What we do is not for every high net worth client. It's for clients that care about what they build, about their legacy, about their family. They tend to be charitable, faith-based, and very interested in helping people beyond themselves.” – Michael… Click To Tweet