Michael Seltzer is a founding member of Vérité Group, LLC, specializing in advanced life insurance structuring and funding strategies.
High-net-worth global citizens face unique estate planning challenges, which can include navigating multiple tax jurisdictions, managing cross-border wealth transfer and ensuring the protection of assets from ever-shifting international regulations and potential political risks.
U.S. life insurance planning is a practical element of wealth preservation and risk mitigation, used to address some of these challenges, especially those concerning U.S. domiciled wealth. By offering tax-efficient benefits, asset protection and liquidity solutions, life insurance can play a crucial role in minimizing estate tax exposure and facilitating the smooth transfer of wealth.
For the right candidate, premium financed life insurance can be an effective strategy for acquiring coverage while maintaining control over cash flow.
A Tailored Solution For A Global Client
My company, Vérité Group LLC, recently partnered with a life insurance agent to implement a planning strategy for a 50-year-old Mexican business owner. The client, a key stakeholder in his family’s business, sought a strategy to ensure the company remained intact for his family while providing his wife with financial security upon his passing—an informal buy-sell arrangement.
With significant U.S. assets, including investments and property, he initially considered purchasing a traditional life insurance policy. However, the premium payments posed a cash flow burden, diverting capital he preferred to reinvest in his business or portfolio. Enter premium finance: A structure that offered payment flexibility and preserved liquidity.
Working with his U.S.-based trust and estate planning attorney, the client established a U.S. irrevocable life insurance trust (ILIT) with a U.S. trustee. The trust became the owner and beneficiary of the Indexed Universal Life (IUL) policy.
To fund the strategy, the trust borrowed the first-year premium from an experienced lender in the premium finance market, posting a certificate of deposit (CD) as secondary collateral. Annual debt service payments, projected for 11 years, were manageable within his cash flow, leaving capital free for other opportunities. Upon his death, the policy’s death benefit will provide his wife with tax-free proceeds in U.S. dollars, securing her future while keeping the family business intact.
Why Premium Finance Appeals To Foreign Nationals
Premium finance is gaining traction among high-net-worth foreign nationals—and for good reason. It provides access to U.S. life insurance—a stable, USD-denominated asset—without tying up significant capital. For clients like our Mexican national, the strategy aligns with broader financial goals. Insurance carriers and lenders are expanding programs to capture this growing market, recognizing the demand for U.S.-based solutions.
Beyond stability, the structure addresses a critical tax challenge: Foreign nationals face a drastically lower estate tax exemption than U.S. citizens—$60,000 versus $13.61 million in 2025—leaving larger estates vulnerable to hefty tax liabilities. Life insurance proceeds, when properly structured through an ILIT, remain outside the taxable estate, offering a powerful shield.
As explored in a previous article, this approach is particularly valuable for those with U.S. situs assets. The premium finance approach adds another layer of efficiency, making it a standout option for advisors serving global clients.
The Ideal Candidate
Premium finance isn’t for everyone—it’s a bespoke tool for the right client. Ideal candidates are accredited investors or entrepreneurs with better uses for their capital than funding traditional premiums. They view annual insurance costs as a drag on free cash flow, preferring to reinvest in ventures promising higher returns.
To qualify, clients need unencumbered, liquid U.S. assets (e.g., cash or CDs) to pledge as collateral, sufficient cash flow to cover loan interest and a genuine need for U.S. life insurance—whether for estate liquidity, wealth transfer or family protection.
Navigating Risks With Expertise
Like any sophisticated strategy, premium finance carries risks that demand careful management. Interest rate fluctuations can increase borrowing costs, potentially straining debt payments. Policy underperformance—tied to market-linked IUL returns or carrier stability—might require additional collateral. Credit risk looms if the borrower’s financial health falters, jeopardizing loan renewals. Finally, tax consequences could arise if a policy lapses with an outstanding loan.
These complexities underscore the need for an experienced team to design and monitor the transaction, including life insurance agents, financial advisors, attorneys and premium finance specialists.
Supporting Foreign National Clients In Premium Finance
Based on my experience with the Mexican business owner, there are several strategies advisors can use to identify ideal candidates for premium finance and better serve foreign national clients.
• Identifying the ideal candidate: Ideal clients have substantial U.S. assets (e.g., investments or real estate) and prefer to preserve liquidity. Entrepreneurs or accredited investors seeking to reinvest capital rather than commit to insurance premiums are prime candidates.
• Building a cross-functional team: Collaborating with U.S.-based estate attorneys, insurance specialists and lenders familiar with premium finance ensures a seamless strategy.
• Emphasizing flexibility and liquidity: Premium finance allows clients to leverage U.S. life insurance without tying up substantial capital, aligning with broader financial goals.
• Managing risk and expectations: Ensure clients fully understand the risks associated with premium finance. It requires careful management of loan interest, collateral and policy performance.
• Leveraging U.S. estate tax exemption strategies: Premium finance can help minimize estate tax liabilities, especially for foreign nationals, when structured through an ILIT.
• Simplifying the process for clients: Breaking the process into manageable steps and providing clear guidance helps clients understand the long-term benefits.
Premium finance represents a powerful solution for high-net-worth foreign nationals looking to preserve wealth while addressing estate planning challenges. By recognizing the ideal candidates, building the right advisory team and ensuring clients are equipped with the knowledge to navigate the process, advisors can help foreign nationals successfully leverage this strategy and achieve their financial objectives.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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