Premium Financing: The Tool with the Reputation

The money the bank puts in doesn’t count as a gift.

That’s the mechanic underneath premium financing, and it’s the one most attorneys and advisors either haven’t heard clearly or heard once, badly, and shelved. On Episode 66 of March to a Million, RJ and I sat down with Jacob Brigati of Simplicity UFC to walk through what the strategy actually is, when it fits, and — the part I asked most about — how a firm that does this at scale protects clients across the 15-to-20-year horizon these policies live on.

I’ll say the quiet part first. I carried a bad impression of premium financing for years, from the days when I was practicing law and watching insurance go wrong at the edges. This episode was partly me testing whether the current version of the tool holds up. The short answer is yes, when it’s structured conservatively and managed actively — and the current version is materially different from the version that produced most of the horror stories.

Here’s what stood out, as someone who works with attorneys and advisors every day.

The gift-tax mechanic is the whole game.

A bank funds the insurance premiums inside an irrevocable trust. The money the bank puts in is a loan, not a gift — so it doesn’t consume the client’s unified credit. The only dollars that count against the credit are the client’s partial interest payments. That single feature is what lets a household create meaningful death benefit for a fraction of the gift-tax cost of writing full premiums out of estate assets. Properly structured through an ILIT, the death benefit lands estate-tax-free and income-tax-free on the back end.

The client profile is specific. 

Net worth $10 million and up, income $200,000 and up, generally 30 to 65 years old with an insurable medical profile. The strategy assumes an estate that’s continuing to grow — projecting past the current unified credit (roughly $15 million per spouse in 2026, growing at approximately 2.24% per year) and into the taxable band. Clients under $10 million net worth can still use a no-collateral variant Jacob’s team runs. Above $10 million, some form of outside collateral has to be posted, which means the household needs another roughly $5 million of cushion beyond the policy itself.

The use cases run wider than estate-tax liquidity. 

Loan-call protection for owners with personal guarantees on business or real-estate debt — Jacob told the story of a $25 million client whose friend passed and had his loans called at death, which is what made the case real for him. Buy-sell funding. Asset equalization between children in the business and children out of it, where the business itself can’t be split without breaking it. Retirement income structures with a decision point around year 10 about whether to reduce the death benefit to maximize income or hold and let it ride. Roth-conversion-adjacent strategies where a coordinated transfer sequence and IUL funding shrinks the taxable estate while moving assets outside of it. None of these live inside a single-product pitch, and every one of them belongs on the coordinated planning list before the CPA and estate attorney are looped back in.

The conservatism is what makes the current version defensible. 

The version of premium financing that produced the horror stories tended to be aggressive on projected returns and rosy on assumed loan costs. Simplicity’s illustrations run the other way — 6.6% projected returns on the earnings side, loan rates rising to roughly 7.25% by years 8 and 9 despite the Fed dot plot pointing to 4.5—5%, and two zero-return years baked into the earnings projection plus a third zero on the collateral projection. That’s an underpromise-and-overdeliver posture built into the model. Jacob’s claim, which will bear out over time, is that his book is tracking to or beating the illustrations because the illustrations were intentionally pessimistic.

Active management across the horizon is the hidden work. 

The failure mode of premium financing isn’t the initial sale — it’s the tenth-year drift when nobody has been reviewing actual-versus-projected performance and the loan side stops behaving. Simplicity runs a dedicated renewal team producing comparison performance reports every year for the life of every case. That’s the operational discipline that separates the responsible version of the tool from the version that gave the category its reputation. It’s also the discipline no individual WSN attorney should be trying to run in-house.

The partnership structure preserves the attorney relationship. 

Simplicity UFC is the specialist inside the case. The WSN attorney remains the client’s trusted advisor and the coordinator of the plan — bringing the specialist in, staying in the room during structuring, staying in the loop across the annual reviews. That’s the model. It’s the same integration argument this newsletter has been making all year, applied to a specific high-net-worth situation the general-practice advisor should not try to execute alone.

The question this episode leaves us with isn’t whether premium financing belongs in every plan. It plainly does not. It’s whether we recognize the household in front of us when the client profile fits — the leveraged business owner, the real-estate operator running $40 million of properties against $20 million of loans, the estate approaching the unified credit — and whether we know the specialist to call when the answer is yes.

Listen to the full episode wherever you get your podcasts: search March to a Million Episode 66.