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The Economics
Why premium financing can outperform paying out of pocket
When your portfolio earns more than the loan rate, financing preserves capital and lets it keep compounding. Use the interactive calculator below to see how the numbers change.
Illustrative Scenario
Adjust the assumptions
Compare paying premiums out of pocket versus financing them while your capital stays invested.
Pay Out of Pocket
$10.05M
Total economic cost at year 20
Premiums paid$2.50M
Opportunity cost$7.55M
Finance the Premiums
$5.30M
Total economic cost at year 20
Loan interest accrued$5.30M
Capital kept invested$2.50M
Estimated Economic Advantage
+$4.75M
Financing preserves capital that keeps compounding. The spread between your portfolio return and the loan rate is the source of the advantage.
Illustrative only. Excludes taxes, policy charges, collateral requirements, and cash value growth. Actual results depend on carrier, lender, credit, and market conditions.