Are you making the most of split dollar? Are you familiar with split dollar?

What we are talking about in this segment is Loan-Based Private Financing -or- Intra-Family Loans for you marketers.

Split Dollar has been around for years and it’s been almost 10 years since we have had the final regulations put out on Split Dollar Planning.

Most advisors think Private Split Dollar and Private Financing is a strategy reserved for the Uber-Wealth High-Net-Worth Client that needs a way to finance their insurance needs without paying gift taxes, or paying limited gift taxes.

However, for the purpose of this article we are taking a different approach.

Our last piece that we wrote about was the Power of Term Conversions, and how over a 20 year period, Permanent Insurance for Moderate to High-Income earners is a better deal financially. I assist insurance agents and financial advisors on a daily basis with insurance planning, and show them and their clients asset repositioning strategies to pay for life insurance vs. an asset spendown.

Do you have wealthy clients with children with life insurance needs -or- clients with life insurance needs with wealthy parents?

Enter……..The Private Family Loan -or- Intra-Family Loan. In a nutshell, what we are showing is how a wealthy parent can assist their child with life insurance planning by loaning the premiums to purchase permanent life insurance, in turn for, interest due on the loan.

This strategy is not only less expensive for the child than purchasing term insurance, it has it’s benefits for both interested parties.

If you’d like to learn more, please contact your Brokerage Manager!