WebinarGo after Affluent Clients with the CALM Plan!
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Premium Financed Life (PFL) WITHOUT the Loan!
By: Roccy DeFrancesco, JD, CAPP, CMP

PFL using IUL to generate “tax-free retirement tax-flow” is very popular right now.

Using “other people’s money” to grow your wealth—PFL for retirement income uses one of my favorite concepts, e.g., leveraging other people’s money to build wealth.

You don’t know what you don’t know

I’ve been putting out educational newsletters for over 10 years and if you hadn’t noticed, I’m a bit of a know-it-all. But you know what, no one knows it all and this newsletter is a reminder to myself to continue to do my due diligence concepts being pitched to clients.

I know the numbers of PFL for income do work. Heck, I hosted a 1.5-hour PFL Boot Camp and had two of the top PFL experts cover the topic in great detail. To view the Boot Camp webinar on recording, click on the following link:


PFL vs. funding the “best” IUL WITHOUT financing

Many who read this newsletter will want to learn about the “best” IUL in the industry today when it comes to tax-free borrowing. If you are one of them, click on the following link:


I recently reviewed an FPL sales presentation an advisor’s client was getting pitched. The advisor was NOT familiar with PFL for income and asked me my opinion.

My off-the-cuff answer was that PFL should work out well for the client, but I said to myself, hey, don’t be LAZY, run the numbers to confirm it. So I did, which led to this newsletter.

Example: 48-year old female, preferred.

  • IUL PFL payments = $59,169 for 10 years.
  • Client paid $31,550 of her own money into the policy each year for the 1st five years.
  • IUL illustrated rate of return = 5.73%.
  • Lending rate on the loan starts at 2.75% and scales up to 4.73% in years 11-15.
  • Loan is paid back in a lump sum of $655,000 in year 15.

Tax-free borrowing from ages 65-90 = $39,000

Ok, so that looks pretty good right?  It certainly compares well to putting the same $31,550 each year into a brokerage account or even a tax-deferred 401(k) plan.

Funding $31,550 for 5 years into the industry’s “best” IUL Instead

I ran the numbers on funding the industry’s best IUL without the leverage with the same out-of-pocket amount as the PFL structure. The numbers surprised me and reminded me not to be lazy.

Tax-free borrowing from ages 65-90:

$47,962 OR $39,945

Why the OR and different numbers? The higher number was run at the “default” crediting rate (like the PFL illustration) and the lower number was run at 13% less than the default rate.

That’s odd, it’s more or much more borrowing than the PFL illustration.

Why? The main reason is because the IUL policy I consider to be the “best” in the industry doesn’t allow their policies to be used in PFL structures.

The policy that was used in the PFL illustration is NOT one I recommend (and it was run at the “default” crediting rate (something I also don’t like to run)).

What does this mean? It means there are going to be some upset people in this industry because I ran this newsletter and put forth the above math.

Why incur the risks of PFL if you don’t have to?

What risks? Interest rate risk (the illustration projected out 15-year interest rates on the loan but we have no idea what they will be in 3, 5, 10 years). The client also has a $655,000 loan on the policy in the 15th year that will stay on the policy for 30+ years (if the client lives that long).

An ethical way to sell PFL? Run just the numbers I ran and give both to the client. Which do you think they will choose?

Are all PFL sales run for income now obsolete? No, I’m not saying that as a fact. I’ve not run 100 different fact patterns to see how the math shakes out. I’m just saying be diligent in your efforts to help clients find the best solution for their particular situations.

Looking forward to 2023…FYI, the policy I consider the “best” IUL in the industry right now is supposed to start allowing their policies to be sold in PFL sales.  So, we and our future clients have that to look forward to.