Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, June 4, 2005

Nonrecourse Premium Financing for Life Insurance

In Letting an Investor Bet on When You'll Die -- New Insurance Deals Aimed At Wealthy Raise Concerns, Wall St. J., May 26, 2005, at D1, Rachel Emma Silverman defines this technique as follows:
A new way to finance life insurance is being pitched to wealthy older people:  A financing company lends you or a family trust money so you can buy a large insurance policy on your life.  The loan lasts for at least two years. If you die during the loan period, your estate must pay back the loan, plus interest and fees. What's left goes to your heirs.  If you survive, you can keep the policy and pay back the loan. Or you can transfer the policy to the lender.
Ms. Silverman's article provides additional information and discusses the pros and cons of the technique. 

http://lawprofessors.typepad.com/trusts_estates_prof/2005/06/nonrecourse_pre.html

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