• Minimum deposit products have appeal for several reasons.
  • The agent receives full commission on the premium whether the premium is paid or borrowed.
  • The insured lowers his actual outlay and can further decrease his effective outlay by receiving a tax deduction.
  • There is no need for a minimum deposit policy to have a level death benefit or just a return of the cash value as a death benefit.
  • It is possible that a different pattern of death benefits could create a more viable product.
• The object is for the product to be paid with tax deductible interest.
  1. . The death benefit is the return of premium with interest.
  2. The cash value is equal to at least the accumulation of the premium at the loan interest rate.
• The use of indexed loans could offer greater tax leverage to the buyer.
• There are many uses for the product so designed. For example, the large cash buildup and no accounting cost to the company make it viable for key man and split dollar situations.

--   Lawrence Silkes

1983 - SOA - Individual Life Insurance, Society of Actuaries - 22p