Premium financed life insurance is a strategy where an individual borrows money to pay for the premiums on high-value policies like whole life or universal life insurance. The loan, often from a bank, uses the policy’s cash value and death benefit as collateral. This approach is popular among high net worth individuals and businesses who want to maintain liquidity while leveraging their assets. By financing the premiums, they can keep their capital invested in higher-yield opportunities and afford larger policies that offer greater benefits. This strategy offers several advantages, including the preservation of capital, tax-deferred cash value growth, and tax-free life insurance proceeds to beneficiaries. By borrowing at lower interest rates, individuals can achieve higher overall returns if their investments outperform the cost of borrowing, making it an effective tool for estate planning or business cash flow management.