Premium financing is intended for individuals who have a need for life insurance but do not want to use or liquidate existing assets in order to pay the premiums.

Under this type of arrangement the insured takes out a loan from a third party lender in order to pay the required premiums

The life insurance carrier is not party to the loan arrangement. The lender sets the interest and loan repayment schedule. The lender will almost always require collateral for the loan, usually the cash value, and sometimes additional collateral as well.
The best prospects for premium financing are usually older individuals who have a net worth of at least $5,000,000. Very often these prospects are business owners or individuals who have their assets tied up in other investments. The rate of return on these other investments is usually greater than the interest rate on the loan for the life insurance policy.

This type of arrangement works best in a low interest rate environment.