Company X has purchased Indexed Universal Life Insurance on 2 officers or key employees. The beneficiaries of the policies are the key employees' family.
Company X has taken a loan from a third party to pay the premiums and owns the policies. The employees have direct access to the cash value and death benefit beneficiary designation.
The company only has to pay interest every year for five years on the loans that are paying the policy premium.
Can the company write off the interest for the loan?
Is there a way to layer a split dollar agreement on this situation for tax benefit?
Do the proceeds have a taxable amount when the policy is paid out to the beneficiaries? Would this amount be a ratio of the interest deducted compared with the initial five premium payments made by the bank?