Life Company Loans: Lower Leverage, Longer Term

Life insurance companies are conservative by nature. They're lending long-term institutional capital, typically on stabilized, high-quality properties with strong sponsors. If your client (and their asset) checks those boxes, they might land a low-rate, low-leverage, nonrecourse loan with excellent terms. But if the deal has hair on it, a life company lender probably won’t touch it.

This article, part of our comprehensive guide to all commercial loan types, will take you through the ins and outs of life company loans.

What Is a Life Company Loan?

Life insurance companies lend to commercial real estate borrowers as part of their investment strategy. These loans are held on balance sheet — not originated for sale — so underwriting is tight, and the borrower relationship matters.

Loan sizes can range widely, but most life companies prefer deals in the $5 million to $50 million range. That said, some go much higher, and others have small-loan programs.

What Life Companies Look For

To close a deal with a life company lender, your borrower usually needs:

• A fully stabilized asset with strong in-place cash flow
• Conservative leverage (often 55% to 65% LTV)
• A strong location and durable market fundamentals
• A low-risk sponsor with a clean track record

Most life company lender deals are on core or core-plus assets — multifamily, industrial, office, or retail properties in primary or strong secondary markets. Construction, lease-up, or heavy value-add strategies typically won’t qualify.

Where Brokers Fit In

Life company lenders often work through a network of approved correspondents or mortgage banking firms. Brokers typically can’t place deals directly unless they have a relationship with one of these intermediaries. If you’re brokering a deal, it’s important to know:

• Whether the life company works with outside brokers at all
• If you’ll need to go through a correspondent
• How compensation or fees are structured in these scenarios

What Makes These Loans Appealing

Life company loans often come with:

• Long-term fixed rates
• Nonrecourse structure (with standard carveouts)
• Flexible prepayment options (depending on lender)
• Low fees and smooth execution

They can compete with agency or CMBS debt on rate and structure — and they’re often much simpler to close.

For example, a borrower refinancing a fully leased, Class A industrial building in a major distribution market might find a life company lender willing to offer a 15-year, nonrecourse loan with flexible prepay and attractive terms. The deal works because the asset is clean, the location is proven, and the borrower has a long track record.

Asset Type Preferences and Red Flags

Life company lenders have strong preferences when it comes to asset type:

• Multifamily: Institutional-quality, market-rate units in strong locations. Less interest in student or affordable housing.
• Industrial: Distribution and logistics centers with long-term tenants are highly favored.
• Office: Limited to stabilized, Class A properties in proven markets. Suburban or mid-tier offices can be tough.
• Retail: Favorable if grocery-anchored or essential-service centers with national tenants. Avoids big box or unanchored centers.
• Hospitality/Special Use: Generally avoided unless it’s a flagged property with excellent performance.

Even within preferred types, life company lenders are focused on asset quality, tenancy strength, and long-term income durability.

Typical Deal Profiles

Here’s what a typical life company loan might look like:

• Loan terms of 10 to 30 years
• 25- to 30-year amortization
• Minimum DSCR around 1.25x to 1.30x
• Conservative leverage — rarely over 65% LTV
• Preference for major metros or strong secondary markets

Some life company lenders also offer assumable loans, rate locks, or flexible prepay structures — but that varies.

Broker Tips

• Know your borrower’s story — life company lenders care about sponsor strength
• Be realistic about leverage — these deals don’t stretch
• Package the deal cleanly: stabilized financials, strong comps, and minimal surprises
• Relationships matter — life company lenders often work with a small network of trusted intermediaries

Execution Speed and Process

Life company lenders are selective but efficient. A clean deal with strong documentation can often close in 45 to 60 days. Underwriting is tight — expect full third-party reports and thorough sponsor diligence — but not the red tape seen with CMBS or agency.

When Not to Use Life Company Debt

These loans will virtually never work if:

• The borrower needs leverage over 70%
• There’s major deferred maintenance or repositioning risk
• The sponsor has limited experience or recent credit issues
• The property is in a tertiary or unproven market

In those cases, a bank, debt fund, or other alternative may be a better fit.

Asset-Specific Underwriting Nuances

Life company underwriting varies slightly by property type:

• Industrial: Emphasis on tenant rollover schedules, lease terms, and tenant creditworthiness.
• Retail: Co-tenancy clauses, anchor leases, and tenant sales are reviewed closely.
• Multifamily: Unit mix, operating expenses, and occupancy trends are scrutinized.

These subtle differences can impact loan terms and approvals — especially when paired with location-specific considerations.

Final Word

Life company loans aren’t for the vast majority of borrowers — but when you’ve got a clean deal and a qualified sponsor, they can be an excellent option. Know when to reach for this part of the capital stack, and your clients will thank you for it.