A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent Daniel Walker

UPDATED: Dec 10, 2021

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Don't Miss These Facts

  • Some life insurance companies offer commercial real estate loans to low-risk borrowers
  • Life insurance companies tend to choose loans for retail, industrial, office buildings, and apartments
  • Loans from a life insurance company are popular because they offer low-interest rates and early lock-ins for rates

When people think of life insurance companies, they often only think of life  insurance policies. However, some life insurance companies also offer commercial real estate loans.

A life insurance company is a great choice when you need a loan to buy real estate. In fact, life insurance commercial real estate lending is one of the best options out there for long-term fixed rates.

Life insurance companies usually don’t accept risky loan applications for many reasons. If you’re looking for real estate loans for shopping centers, hotels, and office buildings, a life insurance company might be the right lender for you.

If you want to find rates from life insurance companies that provide real estate loans, you might consider purchasing a policy from that same company. If you’re ready to see what life insurance quotes might look like for you, enter your ZIP code into our free tool to get started.

Life Insurance Companies That Provide Real Estate Loans

Today, business owners find real estate loans attractive compared to traditional options like Fannie Mae or Freddie Mac-insured financing. But how exactly does a loan provided by a life insurance company work?

To start, the loan you receive might not be from a single life insurance company. Often, life insurance companies work together to provide loans with the least risk possible.

After all, if a life insurance company takes a hit on a real estate loan, they’ll have to charge future customers a higher rate for insurance. To stay competitive, life insurance companies need to offer the lowest rates possible.

Life insurance commercial real estate lending usually goes out only to borrowers the company feels safe with and confident they will repay their loan. Life insurance loans generally go towards real estate projects like:

  • Apartment complexes
  • Retail spaces, especially in areas that have proven to attract customers
  • Class A office buildings
  • Industrial properties
  • Hotels

There are occasions when builders looking for a loan for a multifamily property use types of life insurance real estate loans, but they usually go for more traditional funding methods.

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What is a commercial real estate loan?

A commercial real estate (CRE) loan works similarly to the loan you take out to buy a house. The big difference? CRE loans are for buildings you do business in. The typical borrower for a CRE loan is a small business owner looking to buy, renovate, or expand their business space.

Another difference between a house loan and a CRE loan is that the lender technically owns the property instead of the borrower.

In this situation, the borrower acts as a renter, paying monthly installments to the property owner. However, the lender doesn’t get involved in the actual business. Fail or succeed, the lender is only there to collect a monthly payment.

Life insurance companies aren’t the only lenders that provide CRE loans. Banks, pension funds, private investors, and independent lenders offer CREs loans, and they each have different levels of risk they are willing to work with.

Life insurance companies sit on the conservative side of risk-taking. If your loan involves a good deal of risk, you might be better off looking for a private investor.

One final difference between residential loans and CRE loans is how the loan is paid.

Homeowners typically get a 30-year loan. At the end of their 30 years, the house is paid for in full. CRE loans, on the other hand, usually have shorter terms. The borrower makes monthly payments between five and ten years, then one giant payment at the end of the period to pay off the balance.

The big, final payment is known as the amortization of your loan. The final payment amount is determined by the term of your loan and the number of years in the amortization.

Are life insurance companies a good option for a commercial real estate loan?

Life insurance companies are an excellent option for a CRE loan – for the right borrower.

One of the most attractive features of a life insurance CRE loan is that they usually have the lowest interest rates available. An insurance company can lock in rates at the time of your application rather than when the application is officially approved.

Since their loans are so attractive to borrowers, life insurance companies can be picky about who they lend to. In general, life insurance companies go for new properties that will receive traffic and are in a prime location.

Another consideration that a life insurance company will take is the loan-to-value (LTV) ratio. An LTV ratio is essentially an assessment of the risk a lender will take if they give a borrower money. The higher the percentage, the riskier the loan.

While all companies are different, most life insurance companies won’t touch an application with an LTV higher than 65%.

Life Insurance Company Lenders List

When you want to take a CRE loan out and think a life insurance company is the best option for you, it can be challenging to know where to start. After all, there are several life insurance companies that don’t provide real estate loans for every company that does.

To get an idea of where to start looking, here are a few of the top-rated life insurance companies that provide CRE loans:

  • Aetna
  • Securian
  • AIG
  • Allstate
  • American Family
  • Country Financial
  • John Hancock
  • Nationwide
  • Prudential
  • State Farm

As you can see, if you’re looking for affordable life insurance companies that provide real estate loans, you have plenty of options.

How do you apply for a commercial real estate loan?

When you’re ready to apply for a CRE loan, the process isn’t much different than applying for any other loan. Contact the company of your choice to start the application process. You’ll either fill out a paper form or, more likely, complete the necessary forms online.

One of the first things a life insurance company will look at is how risky your loan is. There are three major things the company will look at when considering if they want to lend to you:

  • Your business finances. Small businesses are risky, and the lender will want to see your business makes enough money to pay it back. Your business’ credit score will also be a factor.
  • Your personal finances. You (or you and your partners) will want to see what sort of financial problems you’ve had before. The more problems you had, the riskier you are to lend to. Make sure to keep your personal credit score high for the sake of your business.
  • The property features. As stated before, life insurance companies like new, lots of traffic, and prime location.

Next, you should make sure you have everything available that a life insurance company might ask for. The process to get a loan can be long and slow, but you can speed things up by having the following ready to go:

  • Your business plan
  • Tax returns for your business
  • At least three months of bank statements
  • An independent property appraisal
  • Your books, financial reports, and records
  • A detailed description of your collateral

Life insurance companies tend to be a little more cautious than other lenders regarding CRE loans, so having that information ready is a good idea.

Finally, you should do whatever you can to improve your chances of approval. This includes:

  • Offer as much collateral as you can (consider the accumulated cash value of a whole life insurance policy)
  • Pay off as much debt as possible to improve your credit score
  • Offer a larger down payment
  • Add a cosigner or an investor

Typically, people with poor credit and new businesses struggle to find affordable life insurance companies that provide real estate loans. If that applies to you, try to make yourself look as appealing as possible before applying.

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Find the Best Real Estate Loans Through Life Insurance Companies

Opening or expanding your business is similar to having a baby – it takes a lot of work and money, but the end result is something to be proud of. If you’re ready for a commercial real estate loan, choosing a life insurance company might be your best option.

If you need help with your collateral, consider a life insurance policy – preferably from the same company you want to borrow from.

Quotes from life insurance companies that provide real estate loans can also help you find the best policy for your needs. If you want to see what quotes might look like for you, enter your ZIP code into our free tool today.