Borrow to Pay for Your Life Insurance and Save Money

I completed a Life Insurance Assessment for a client today and, in effect, I recommended that they borrow to pay for their Life Insurance premiums. I calculated that the overall cost to borrow the Annual Premiums, including the Interest, was lower than paying the premiums monthly.

• Premium Frequency Loadings: Life Insurance companies usually add a 'premium frequency loading' if you elect to pay the premiums on a Monthly, Quarterly or Half-Yearly basis.

• Home Loan or Mortgage Offset Account: If you Redraw the Annual Premium from your Home Loan, or withdraw the amount from your Mortgage Offset Account, and then repay the amount over the year, the Interest Cost may be lower than the Premium Frequency Loading cost.
• Saved $1,370.36: In my client's case, I calculated a total saving for the year of $1,370.36, if they borrowed the Annual Premiums from themselves (i.e. using their Home Loan), as opposed to paying their Life Insurance Premiums on a Monthly basis.

Of course, each individual's circumstances and Life Insurance Premiums will vary, so I recommend a thorough analysis of your requirements is completed before you implement any strategy like this. Of course it's all part of the service for my valued clients!