Robert J Russell has been selling life insurance for over 32 years so this topic is not new to him at all and now here are ways NOT to get ripped off buying life insurance.
For some people, under the right circumstances, using leverage (i.e., loans) to pay the premiums on a larger life insurance policy is a very smart move. This strategy can be used to cost effectively address estate planning needs as well as fund deferred compensation and other corporate benefits.
“The issue is that many people who buy premium financed life insurance end up or will likely end up with a life insurance strategy that does not work as presented leading to anxiety, unanticipated costs, and sometimes lawsuits,” says Pat Rufolo, Chairman of the Private Client Services Group, McElroy, Deutsch, Mulvaney & Carpenter, LLP. “The problem is that there are times premium life insurance is badly oversold with unrealistic ‘promises’ such as cost-free life insurance.”
Robert J Russell of InsurancePricedRight.com is a leading authority on life insurance policies and strategies. He is also a renowned expert witness in the field. According to Mr. Russell, “Based on evaluating these types of transactions, there are many ways they can falter. From failing to recognize that, over time, interest rates will move around to all too rosy projections concerning the investment performance of policies to convoluted structuring arrangements including wrapping the interest owed into the policies, a good number of these transactions are like landmines waiting to explode. Someone is making a serious mistake when it comes to premium financed life insurance by not having the transaction vetted before entering into it; looking at it as a way to have ‘cheap’ life insurance; and buying an amount of insurance that has no bearing to their needs.”
Without question, there are times when premium financed life insurance is a very good strategy because a person who, for example, needs a large amount of life insurance lacks liquidity. The potential problems with the strategy are often a function of a lot of moving parts and dubious assumptions.
For individuals who have premium financed life insurance or are considering buying life insurance this way, it is wise to carefully address all the possible complications and the impacts of those complications from potentially needing to post more collateral to the policy collapsing. Many times the best way to evaluate the viability of a premium financed life insurance strategy is to get a second opinion from a qualified expert.
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