Premium Financing

Life insurance financing, under certain circumstances, is an effective solution to finding affordable financial protection for your family.

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

Insurable interest is in one’s own benefit. People would like to cover the risk factor by protecting the interests of those whom they are associated with. The risk factor is too big to be taken here. There can be several examples to prove the point:

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

Different people have different reasons to protect the interests of others. It is often witnessed in the case of businessmen who buy it to secure themselves against any kind of unexpected situations in life. They have reasons to protect the interests of employees who make a larger part of the organization. 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.  Business partners usually buy it as they have specified interests to protect.

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 usually made only for a certain percentage of the collateral value.