An increase in the interest rate has an immediate impact on the loan, resulting in a higher amount of repayment. Clients who are considering premium financing may encounter the following issues when it comes to rising interest rates:

  • Diminishing effect on leveraging
  • Concerns on interest rate volatility
  • No more ‘cheap’ money
  • Outstanding loan will be deducted from the death benefit payout


Multi-pay premium approach is an alternative option to pay for an insurance policy over a period of time, rather than paying the full premium upfront. This payment option allows clients to better manage personal or business cash flow and leverage capital to meet other investments or business needs.


Eliminate the concern of having to offset outstanding loan (if any) upon death

If death occurs during planned premium schedule, full sum assured is payable

Opportunities through multi-pay by utilizing surplus cash for other investments

Flexible premium payments allow clients to make changes to their payment schedule as needed post policy issuance

Flexibility on cash flow

No financing cost


Mr Lo would like to optimize his wealth to leave a legacy for his children and to possibly have more accessible funds for other investments. He is considering an indexed universal life insurance product with US$10M death cover for wealth transfer planning.

However, Mr Lo has concerns about interest rate volatility. He is uncertain about how much loan interest he has to pay, and how he should plan his cash flows to fund it.

Mr Lo’s Profile:

  • Age 50
  • Non-smoker 
  • Super Preferred
  • Death Coverage: US$10M

Original ProposalAlternative Solution 
Premium PaymentSingle Pay (with premium financing)
  • Cash Outlay: US$0.5M
  • Loan Amount: US$1M
Multi-pay (without premium financing)
  • Annual Premium: US$193,000*
Financing Cost1.5% p.a. - 5.5% p.a. (subject to changes)N/A
Upon Death of the InsuredShould death occur during repayment period, the outstanding loan will be net off the death benefit.Should death occur during the planned premium schedule period, the death benefit payable is still US$10M.

*The information presented in this deck is not exhaustive. Please refer to the Cover Page (where applicable), Policy Illustrations, Product Summary, Bundled Product Disclosure Document (where applicable) and Policy Contract for the exact terms, conditions and specific details of the relevant insurance products. The information found in this material is for informational purposes only. It should not be used for sales presentations as they do not address your customers' specific and individualised needs, financial circumstances and investment objectives.


We assume no responsibility or liability for any errors or omissions in the content of this material. The information contained in this material is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness and without warranties of any kind whatsoever, expressed or implied. This is intended for educational/reference purposes and nothing contained in this material may be construed as investment, tax or legal advice in respect of any jurisdictions or counterparties. We strongly recommend an independent assessment of the specific legal, regulatory and tax consequences in relation to presented transaction. For internal business training only. Not for external distribution.