Loan regime split dollar is a form of split dollar life insurance arrangement in which the premium payer, often an employer, shareholder, or family entity, advances premiums to the policyowner as a series of loans rather than retaining direct rights to policy values. The policy serves as collateral for the loans, and interest is either paid currently or imputed under applicable federal rates. Over time, the policyowner typically gains increasing equity in the contract, while the lender's right is limited to repayment of premiums and interest. Loan regime split dollar is commonly used in executive benefit plans, shareholder planning, and wealth transfer strategies because it can create favorable economics and clear exit paths when structured properly.

In real world implementation, advisors design loan regime split dollar plans by working with attorneys to draft agreements, security assignments, and collateral documentation. They coordinate with carriers to ensure policy illustrations include appropriate premium schedules and loan scenarios, and they analyze whether the executive or trust can handle eventual tax and cash flow obligations. Ongoing administration involves tracking loan balances, interest accrual, and compliance with IRS guidance such as Notice 2002-8 and subsequent rules. At termination, plans may be unwound through policy transfer, loan repayment, or forgiveness events with corresponding tax consequences. Advisors must be able to explain the structure and risks to all parties, including what happens if policy performance lags. By understanding loan regime split dollar in detail, producers can employ a powerful tool for delivering executive and family benefits while aligning interests and providing flexibility around timing and control.