IMS Associates

Loan Refinancing & 1035s

Do you have clients who have taken out loans on their life insurance policies? Have you reviewed policy projections and long-term viability of their polices?

While policy loans are not taxed, that does not mean they do not have a cost. Many clients unknowingly risk the longevity of their coverage by not servicing interest or repaying policy loans.

Some older Whole Life policies may have annual loan rates in the 6%-8% range, which can impact policy growth and long-term performance.

Some clients may qualify for policy loan refinancing at lower rates, such as 2.5%, depending on underwriting , policy design and current market conditions.

Hypothetical Scenario:
- 65 year old insured
- Current Death Benefit of $1.1M
- $458,167 in Account Value w/ $125,612 Outstanding Loan at 8.0%
- Policy projected to lapse in nearly 17 years

Hypothetical Solution:
- Client transfers entire Account Value including the Loan into new $1.1M policy
- Assuming a new 2.5% loan rate, the client can repay the loan from cash policy in year 2
- Policy is then projected to run over 10 years longer with no further premium
- The new solution requires no additional out-of-pocket premium, could extend coverage beyond life expectancy, and if structured correctly could avoid any taxation.

Explore Solutions for Your Clients Here: Loan Rescue - https://lnkd.in/gSzeDAh8

*Financial professional use only. Not for Public distribution 4739949-0825. IMS Associates does not provide tax, accounting or legal advise. Any case examples are hypothetical and for illustrative purposes only.

The Case For or Against Premium Deposit Accounts

Clients often want to complete Life Insurance funding in a one-time payment, using a Premium Deposit Account (PDA) may be great alternative for a non-MEC strategy that still maximizes IRR for the client.

For example, see how funding via Traditional 10 Pay compares to using a PDA with a 10 Pay. Using $100,000 of funding for 45 Year Male at Preferred Best Rates:

Traditional 10 Pay = $141,122 of Initial DB, and $254,022 at Age 65
Vs.
PDA with a 10 Pay = $181,262 of Initial DB, and $326,642 at Age 65

Reach out to IMS to discuss how to optimize your Short Pay Funding Strategies and compare IRR while using PDA for 5-Pay, 7-Pay or 10-Pay strategies and more here:
https://imsbga.com/premium-deposit-accounts/

A New Year, with New Improvements to Instant Issue and Accelerated Underwriting life insurance programs.

Stay up to speed on the newest changes with the 2025 IMS Accelerated UW Guide.

All programs offered by an "A" rated carriers with top compensation. Download the Guide and find out how you can offer your client's Instant Issue Life Insurance today here: https://imsbga.com/ims-accelerated-underwriting-guide-download/