Life Insurance Premium Payment

Joseph Maier (Director, Agency Development, Northwestern Mutual Life), Jason Handal (Assistant Director, Advanced Planning Division, Northwestern Mutual Life), and Brian Henning (Senior Attorney, Advanced Planning Division, Northwestern Mutual Life) have recently released their article, Solutions for the Payment of Life Insurance Premiums. Here is an excerpt from the article’s introduction:

Back in the good old days, financing large premiums for trust owned life insurance without large gifts was relatively easy. Equity split dollar plans let clients pay those large premiums for the trust, while their gift was merely the term cost for the trust’s share of the death benefit. Most of the premium was basically an interest free loan where the “lender” usually got premiums back during the insured’s life, through a policy loan or partial surrender, or perhaps at death, from the policy proceeds. In 2003 the Treasury shut down new equity split dollar plans, but the problem remains: how can a trust pay large premiums without the client being saddled with gift taxes?

Read the article to learn the authors’ solutions.