Simplify Spotlight: Switch Dollar Plan
The Collateral Assignment Switch Dollar Plan client presentation is now available through Simplify, a powerful, case design presentation tool brought to you by MassMutual Strategic Distributors (MMSD) Advanced Sales.
With interest rates up, Switch Dollar is making a comeback.
A business owner can offer a valuable life insurance benefit to key executives using a split dollar arrangement. In the recent past, loan regime split dollar was used in which the employer pays annual premium on a policy owned by the employee, while the employee pays the employer a fair market rate of interest annually on the cumulative premium loan until the loan is repaid1.
With rising rates, it makes sense to reconsider economic benefit split dollar, in which the employee pays the term cost of the death benefit instead of the loan interest on cumulative premiums paid by the employer. However, to avoid taxation on the policy equity (cash value above cumulative premiums paid), the arrangement can be switched to a fair market loan.
View our new Simplify client presentation to learn more.
As a reminder, you now have direct access to Simplify. Access the website today and easily download the desktop app.
1 Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. The products and/or certain features may not be available in all states. State variations will apply.