Premium Financing

Did you know that it is possible, under certain circumstances, to have your life insurance financed?

If this is something that you might want to consider, you may want to first become familiar with some of the terminology you are likely to encounter.


ILIT is an acronym which stands for Irrevocable Life Insurance Trust.  An ILIT is usually established for those who are approved for premium financing, and it is the ILIT which is made the beneficiary of the life insurance policy.

Insurable Interest

You may be said to have an insurable interest in someone's life if you will be caused to experience substantial financial loss if they die.  It must exist for any insured by whomever it is that is taking out the policy.  You are assumed to have an insurable interest in:

  • Yourself
  • Your spouse
  • Your children
  • Your grandchildren
  • Your great grand children

There may be plenty of other circumstances available too. For example, if you own a business and have an employee whose death would cause the business to lose money, the business may be said to have an insurable interest in this person.  This would be known as key man life insurance. 

Nonrecourse Loan

A nonrecourse, or non-recourse loan is one that is secured by posting collateral and it is only this collateral which may be seized in the event of default.  Because the underlying value of the collateral supporting a nonrecourse loan may vary, such loan amounts are usully made only for a certain percentage of the collateral value.