Understanding Life Insurance Company Lending in Commercial Real Estate

Terrydale Capital

Sep 8, 2023 7 Min read



Commercial real estate investing has long been considered a lucrative avenue for wealth accumulation. However, securing the necessary capital for these ventures can often be a challenging hurdle for investors. One financing option that has gained popularity in recent years is commercial loans from life insurance companies. In this blog, we will explore how life insurance companies participate in the commercial real estate lending market, how it works, and the benefits it offers to commercial real estate investors.

Understanding Life Insurance Company Lending

Life insurance companies, in addition to their core business of providing life insurance coverage, manage substantial portfolios of investments. To maintain profitability and diversify their holdings, these companies often invest in real estate. One way they achieve this is by providing commercial real estate loans. Here's how it works:

  • Application and Due Diligence: Commercial real estate investors interested in securing a loan from a life insurance company submit an application. The life insurance company then conducts a thorough due diligence process, assessing the borrower's creditworthiness, the property's value and potential, and the viability of the investment.
  • Loan Structuring: Once the due diligence process is complete and the loan is approved, the life insurance company and the borrower negotiate the terms of the loan. These terms typically include the interest rate, loan amount, repayment schedule, and other conditions. Life insurance company loans are often characterized by competitive interest rates and favorable terms.
  • Funding: After the terms are agreed upon, the life insurance company funds the loan. The funds can be used for a variety of commercial real estate purposes, including purchasing properties, refinancing existing loans, or funding property improvements.
  • Loan Servicing: The life insurance company handles the servicing of the loan, including collecting monthly payments, managing escrow accounts for taxes and insurance, and addressing any borrower inquiries or concerns.

Benefits of Commercial Loans from Life Insurance Companies

For commercial real estate investors, there are some notable benefits to using Life Companies as a financing vehicle compared to other traditional avenues. They include:

  • Competitive Interest Rates: Life insurance companies typically offer some of the most competitive interest rates in the market. This can significantly lower borrowing costs for commercial real estate investors, leading to higher cash flow and increased profitability.
  • Long-Term Financing: Life insurance companies are known for providing long-term loans, often with amortization periods of 20 to 30 years. This stability in financing can help investors better plan for the future and reduce the risk associated with short-term financing options.
  • Stability and Reliability: Life insurance companies are known for their financial stability and reliability. Borrowers can have confidence in the lender's ability to fund the loan and provide consistent servicing throughout the life of the loan.
  • Flexible Loan Terms: Life insurance companies are often more flexible when it comes to customizing loan terms to meet the specific needs of borrowers. This can include interest-only periods, adjustable interest rates, and other tailored features.
  • Non-Recourse Loans: Many life insurance company loans are structured as non-recourse loans, meaning that the lender's claim is limited to the collateral property itself. This provides added protection for borrowers in case of default.
  • Portfolio Diversification: For life insurance companies, lending in commercial real estate allows them to diversify their investment portfolios beyond traditional securities. This means they have a vested interest in seeing their borrowers succeed, which can lead to a more collaborative and supportive lending relationship.


Commercial loans from life insurance companies offer commercial real estate investors a compelling financing option characterized by competitive interest rates, long-term stability, flexibility, and reliability. These loans can be a strategic tool for investors looking to expand their portfolios, refinance existing properties, or undertake ambitious real estate projects. Terrydale Capital has a wide breadth of deep connections to a variety of life companies across the nation, making us the right partner to take into any investment endeavor. Give us a call today to get connected to the right outlets for your investment needs.

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