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Goheen Insurance: Securing Legacies with Expertise and Integrity.

Premium Finance

Who Can Benefit from Premium Financed Life Insurance?

If you fall into one of these three categories, premium financing might be the next right step for you.

Premium financing is a valuable strategy for many high-net-worth individuals and business owners. This method of funding a life insurance policy with a loan can lower your out-of-pocket premium costs, allowing you to purchase a larger policy than you could otherwise. 

It also provides additional tax and estate planning benefits that can help you both grow your wealth during your lifetime and make sure your interests are protected after you’re gone.

In particular, there are three types of individuals who often benefit from premium financed life insurance:

1. High-Wage Earners Looking to Reduce their Tax Burdens

Premium financed life insurance is not only about securing a larger policy; it also equips you to grow wealth more efficiently during your lifetime. Individuals with a net worth of over $2.5 million in assets or investments, along with a high annual income, are often great candidates for this strategy. ‍

Money invested in a life insurance plan will grow tax deferred, and unlike a 401(k) or an IRA, you don’t have to pay tax when you withdraw the funds. Because of this, many people use premium financing to purchase a large life insurance policy that they can later withdraw money from as a form of tax-free retirement income. 

‍Additionally, the premium financing strategy can limit or even eliminate the out-of-pocket premium costs you’d otherwise have to pay. When you use your loan to pay the premiums, it allows you to keep your own money invested in high-returning and tax efficient  assets. 

2. Business Owners Focused on Protecting Their Legacies

You’ve worked hard to make your business a success; now it’s time to protect your legacy. With a premium financed life insurance plan, you can ensure your business’ continued success well into the future.

‍One of the most common ways businesses use premium financing is to purchase key man insurance. This type of policy allows you to designate an individual who is vital to the business’ success. If that person passes away, a death benefit is paid to the company to help cover any financial strain associated with losing a key employee.

‍If you co-own a business with one or more partners, you can also use life insurance to fund buy-sell agreements. There are several ways to structure these policies — sometimes the owners purchase a policy on their co-owners; other times the business purchases policies for each of the co-owners — but the death benefit generally allows a business owner to buy their partner’s share of the business upon their passing.

3. High-Net Worth Individuals Making an Estate Plan

At Goheen Insurance, we understand that premium financing is more than just a smart financial strategy. For many people, the tax and investment benefits that come with premium financing are added perks, but their main goal is still to provide for their loved ones.

The initial appeal of premium financed life insurance is often that it allows you to purchase a larger policy. This in turn can lead to a larger death benefit, ensuring that your loved ones have everything they need after you’re gone. 

But if structured correctly, a premium financed life insurance policy can also reduce the amount of estate taxes your heirs have to pay. This is especially important for estates worth more than $12 million, and for individuals who will inherit a significant amount of illiquid assets. 

In 2022, heirs are required to pay estate taxes on any amount over $12.06 million, but if structured correctly, your life insurance can be paid out tax-free.  If your policy is owned by an Irrevocable Life Insurance Trust or a Life Insurance Limited Partnership, the death benefit is not taxed, and it can also be used to pay any additional estate taxes quickly and easily. This can save your heirs an enormous amount of money, while also reducing their stress in an already difficult time.

Find a Partner You Know You Can Rely On

As with any financial strategy, the success of any premium financed life insurance policy will largely depend on the people you choose to work with. Many advisors offer premium financing, but it’s important to keep in mind that successfully creating a successful policy requires an enormous amount of expertise. ‍

Look for a partner who has a proven track record of success, a wide range of industry connections, and a willingness to customize your policy to meet your specific needs. Premium financed life insurance policies can vary widely from the design to the collateral to the bank and insurance carrier you choose to work with.

At Goheen Insurance, we understand that every client is unique, so we will work closely with you to build a tailored solution. And with more than $1 billion in premium financed life insurance currently managed, you can trust that your legacy is in the best possible hands. To learn more about how we can help you achieve your business and personal goals, please contact us today.

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Life Insurance, The Simplicity Company, Tips, Wealth Management


Meet Shawn Goheen, the heart and soul behind Goheen Insurance. Since the early ’90s, Shawn has been more than just a financial advisor; he has been a trusted confidant to high-net-worth individuals. His journey has led him to build strong connections with over 15 specialty lenders and insurance carriers, and relationships with 20+ banks, giving him a rare edge in navigating the often-complex financial world with ease and transparency.