Internal Rate of Return | Family Split Dollar

Internal Rate of Return

For those who seek a detailed analysis of the annual insurance cost in a universal life policy and an independent appraisal of internal rate of return on the saving element.

How to create the optimum illustration

The Internal Rate of Return is another "utility" rather than a concept illustration. It should only be used in combination with other illustrations such as the Income Shelter, Insured Inheritance, Capital Gains Protector, Annuity estate Maximizer and RRIF Estate Maximizer. In each combination use, it effectively un-bundles the policy to help you explain why it works so effectively. The most helpful parts of the illustration are not the internal rate of return percentages but rather the two columns that split the premiums between investment portion and insurance costs. By comparing those insurance costs with the taxes that will have to be paid on the alternative investment you'll note that, if you have used a maximum funded illustration the insurance costs over a certain minimum number of years and assuming a certain tax bracket, are actually lower than the taxes that have to be paid.
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Family Split Dollar

An illustration for family members who wish to assist another family member with the purchase of a life insurance policy; can be split on Fund Value, Surrender Value or NCPI.

How to create the optimum illustration

The best way to decide is to run through different illustrations for each of the "splits". If the objective is to have the parent or grand parent by the major portion of the premium, the NCPI split maybe the most appealing.
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Internal Rate of Return | Family Split Dollar