By financing their premiums with a loan to an insurance trust, policyholders can avoid hefty estate taxes and ensure that their beneficiaries' inheritance stays intact. Insurance policies that have an investment component are often not subject to income taxes and can be passed, un-taxed, to beneficiaries. Premium financing is an ideal strategy for people who do not expect to live longer than 25 years, experts say. Banks like Citigroup and Mellon Financial are among the institutions that offer forms of financing premiums through an irrevocable life insurance trust. Policyholders using trust funds as loans to themselves should beware of Internal Revenue Service minimum annual interest rates that can limit the loans they take out on their trusts.