Loan regime analysis is the evaluation of split dollar life insurance arrangements structured under the loan regime, where the employer or sponsor advances premiums to the policyowner as a loan rather than sharing policy benefits directly. Under this approach, interest is charged or imputed on the loan balance, and the policyowner is typically entitled to equity in the policy while the lender retains a collateral interest. Analysis focuses on interest rate assumptions, repayment scenarios, projected policy performance, and tax implications under Section 7872 and related guidance. Proper loan regime analysis helps determine whether the arrangement is sustainable, compliant, and aligned with employer and executive goals.

In advanced planning practice, advisors perform loan regime analysis when designing or reviewing executive benefit plans, shareholder arrangements, or estate planning structures that rely on split dollar. They model how loans will accrue over time, what exit strategies such as rollout or forgiveness might look like, and whether projected policy values can support repayment. Collaboration with tax and legal counsel is essential, since improper handling of imputed interest, documentation, or security arrangements can lead to adverse tax results or disputes. Advisors also stress test policy illustrations to ensure that changes in crediting rates, loan rates, or funding patterns do not derail the plan. By conducting thorough loan regime analysis up front and at periodic reviews, producers help sponsors avoid surprises, maintain compliance, and deliver the promised executive or family benefits in a predictable, tax efficient manner.