Loan Regime Split Dollar

The parties to the loan split dollar arrangement should seek their own independent legal and tax advice as to whether and how to enter into a loan split dollar arrangement based on the employer’s and employee’s unique circumstances.

Under a loan split dollar agreement, the employee enters into an agreement with the employer. Midland National Life Insurance Company is not a party to this agreement and Midland National’s only obligation is to administer the policy it issues (consistent with the policy’s terms and conditions).

Under a split dollar agreement, classified as a welfare benefit plan, the employee must belong to a select group of management, which includes quantitative and qualitative elements. To meet the quantitative standard, plans should be limited to the top 15% of the workforce. To meet the qualitative test, a significant disparity should exist between the average compensation of the top-hat group and the average compensation of all other employees."

To ensure the death benefit proceeds of any employer-owned policy retains its tax-favored treatment, it is essential to comply with the notice and consent requirements of IRC Section 101(j).Under a loan split dollar agreement, the employee enters into an agreement with the employer. Midland National® Life Insurance Company is not a party to this agreement and Midland National’s only obligation is to administer the policy it issues (consistent with the policy’s terms and conditions).

While the primary use of life insurance is death benefit protection, your clients may also have other needs that can be met through life insurance. The sales concepts and accompanying marketing materials may help you broaden your sales potential. As independent contractors, it is up to you to choose which of these concepts may work for your particular sales strategy and clients, and which do not. Please note that Midland National does not require you to use any of these sales concepts; they are resources that can be used at your discretion for your own individualized sales presentations.

Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including Midland National® Life Insurance Company. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, Midland National Life Insurance Company.