S. 4279 pending · watchPersona: Dr. Naomi & Elias Chen · physician household
One in-force $2M whole-life illustration, a $3M term need, and an ILIT question — modeled both ways, gated everywhere. Modeled illustration, not a quote.
7-pay margin (E1)
—
headroom below the MEC line, this policy year · carrier testing governs
Guaranteed-vs-illustrated gap @ yr 20 (E2)
—
the gap is a marketing model — the guaranteed column is the contract
Lapse-with-loan tax if it lapsed today (E4)
—
phantom income — ordinary rates, no cash produced to pay it
Standing flags
S. 4279 (PPLI Abuse Act) — introduced 2026-04-13; proposed §7702C/APPC regime, retroactive to in-force with a 180-day window if enacted; counsel consensus: passage unlikely. Watch-state, rendered on E8. POL.flag.s4279
Wyden-King trusts bill — introduced 2026-04-14; the trust-side companion. Attorney lane, rendered on E5. POL.flag.trustsbill
Split-dollar valuation — Levine vs. Cahill posture contested; no numbers without counsel. POL.flag.splitdollar
AG 49-B parameters — illustrated-crediting caps are config, carrier-supplied. POL.flag.ag49b
Deliberate NO — what this desk will never do
No product recommendation, ever — the divergence is the deliverable.
No surrender, exchange, or loan instruction — those are the professionals’ verbs.
No trust language — the attorney drafts; this desk renders the pair.
No split-dollar numbers without counsel.
No annuity lanes — this desk models life contracts only; §1035 moves to or from annuities route out entirely.
No single-column projection anywhere — both columns, always.
Gates: licensed insurance professional on every product figure · attorney on every trust · CPA on every tax character. Engines propose — professionals ratify.
Fail the §7702A seven-pay test once and the contract is a MEC forever — loans and distributions flip income-first (§72(e)(10)) with a 10% additional tax pre-59½ (§72(v)). The engine models the margin; the carrier’s testing governs.
Premium vs. the 7-pay line non-MEC as modeled
evidence · carrier letter
Margin below the line, per year—
Material changes restart the clock — §7702A(c)(3)face increases · riders · 1035
Show the math & law
marginYr(n) = sevenPayLimit(n) − cumulativePremium(n)
§7702 qualification: CVAT §7702(b) or GPT+corridor §7702(c)/(d); post-2021 rate floors §7702(f)(11) — config, insurer-applied.
MEC consequence: §72(e)(10) LIFO on loans AND distributions · §72(v) 10% pre-59½.
The engine’s test is a model — the insurer’s 7702/7702A testing governs (POL.evid.001, dated).
Both branches — never defaulted
Non-MEC (as modeled)
basis-first
Withdrawals recover basis first (§72(e))
Loans tax-free while in force
FIFO character preserved
MEC — if the line is crossed
income-first, forever
Loans immediately taxable LIFO — §72(e)(10)
+10% additional tax pre-59½ — §72(v)
Status is permanent — no cure
routed → insurance professional · evidence: carrier MEC-status letter (POL.evid.001)
Gate: the carrier’s in-force illustration showing MEC status — dated — is the evidence object. Until it verifies, this panel stays modeled.
Every projection renders two columns, always. The guaranteed column is the contract; the illustrated column is a marketing model constrained by AG 49-B. The gap is rendered as its own figure.
Cash value, both columns modeled · parameters config
Policy yr
Guaranteed (2.0% net, max charges)
Illustrated (5.0%, AG 49-B-capped)
Gap
Gap at year 20 — the figure the pitch never leads with—
Show the math & law
CV(y) = CV(y−1) × (1+rate) + premium × loadFactor — modeled; carrier schedule governs.
Guaranteed column: contractual minimum interest + maximum charges. Illustrated: non-guaranteed elements (dividends, caps, participation) — changeable at carrier discretion; indexed products capped by AG 49-B (no loan-arbitrage spread beyond the cap).
Locked language: the guaranteed column is the contract.
Gate: insurance professional — the dated in-force illustration (both columns) is the evidence object. Item POL.char.001: column-gap materiality.
IRR of premiums to death benefit — by death age, on both columns — is the only honest permanent-life metric. Early-year IRRs are astronomical: that’s insurance doing its job. The crossover is where the story turns.
IRR to death benefit · crossover vs. the E6 alternative
Death age
Yrs paid
IRR to $2M DB
E6 alt — heirs get
Which branch leads
Cash-value IRR, year 6 (honest — negative early years never truncated)—
Show the math & law
IRR solves Σ premium/(1+r)^t = DB/(1+r)^T (bisection). Alt branch: term + (permPremium − termPremium) invested at CFG.altReturn with tax drag — assumptions modeled, adjustable on E6.
Cash-value IRR renders separately: CV(6)=$148K on $231K paid → negative — shown, never hidden.
Gate: CPA + insurance professional — item POL.pos.001, crossover-age presentation.
This panel is why the desk exists. Loans are tax-free while the contract stays in force and non-MEC — and a policy that lapses with loans outstanding triggers gain with no cash to pay it: the phantom-income event.
The loan, modeled
Annual loan drag (loan rate − crediting on the borrowed slice)—
Projected lapse year at this drag (modeled)—
Show the math & law
Loans ≠ distributions while in force + non-MEC (§72). Drag = loan × (loanRate − crediting).
Lapse/surrender with loan outstanding: gain = (cashValue + loanBalance) − basis — ordinary income, §72(e); no cash produced.
MEC branch: loans taxable LIFO immediately (§72(e)(10)) + §72(v) 10% pre-59½.
Lapse-year model: CV grows at crediting minus drag until loan+interest ≥ CV — modeled, carrier schedule governs.
Gate: loan strategy is a posture, not a product feature — the professionals sign it. The lapse branch renders beside every loan figure, always.
§101(a) income-tax-free ≠ estate-tax-free. Personally-owned insurance sits in the gross estate (§2042). An ILIT that issues the policy avoids the §2035(a) three-year fight that transfers of existing policies face.
The exclusion pair — always both columns
Income-tax column
$2M excluded
§101(a) — DB income-tax-free to beneficiaries
True in or out of the trust
Estate-tax column
in the estate
§2042 incidents of ownership — personally-owned DB is includible
ILIT-owned: excluded; new-issue to trust avoids §2035(a) 3-yr rule
Cross-ref: Legacy desk §5 — runway math
routed → attorney · POL.inst.001 · the desk never renders trust language
Pending: Wyden-King trusts bill (2026-04-14) — watch-statePOL.flag.trustsbill
Withdrawal-right notices make trust gifts present-interest (Crummey, 397 F.2d 82). Reconstructed logs are where audits are lost — log them as they happen.
Beneficiary
2026 notice
Status
Gate: attorney drafts the trust; the Crummey log (POL.evid.003) is the evidence object. Until executed + logged, the estate column stays modeled.
Every permanent illustration renders beside level term + the premium difference invested. Neither branch is recommended; the divergence is the deliverable. Skeptic shelf supplies the stress cases; promoter shelf the strongest permanent case — both cited.
Net to heirs, by death age routed · CPA signs the method
Death age
Permanent — $2M DB
Term branch — heirs get
Divergence
Premium difference invested per year (fixture: $38,500 − $2,940)—
Show the math & law
Term branch to age 64 (20-yr term from 44): heirs get $3M term DB + invested balance. After term expiry: invested balance only — the guarantee character difference stated plainly.
invest(y) = invest(y−1) × (1 + altReturn × (1−drag)) + 35,560. Assumptions modeled, adjustable, labeled.
Permanent column: guaranteed $2M DB (loans reduce it). Sources both shelves — cited in the vault.
Gate: POL.pos.003 — the compare-branch method is the CPA’s signature. Term premiums guaranteed level; the investment column is not guaranteed.
Like-kind exchanges are tax-free (§1035(a)) and basis carries. The traps: boot is taxable, loan relief is boot, and a loss policy makes surrender-vs-exchange a routed pair — which is exactly the Chen fixture.
§1035(a) exchange tax-free; basis carries (§1035(b)). Boot (cash received) taxable; exchanging with a loan — relief = boot.
Loss recognition on exchange: disallowed. Loss policy → surrender (loss generally nondeductible personal loss) vs. exchange (basis preserved into the new contract) — the routed pair below.
The loss-policy routed pair
Surrender now
$148K cash
Loss generally nondeductible
Surrender charge applies (schedule)
Coverage ends — insurability risk
1035 exchange
$192K basis carries
High carried basis shelters future gain
New surrender schedule starts
Material change — 7-pay clock restarts (E1)
routed → insurance professional + CPA · the 1035 paperwork is the evidence object (POL.evid.004)
Gate: neither branch is an instruction. The desk tracks the fields; the professionals make the exchange call.
Private placement life insurance renders with four permanent fixtures — and it renders status, not a sales calculator.
Gate: specialist insurance counsel + tax counsel + CPA — POL.pos.004. The desk models structure cost vs. benefit and stops there. The single fact a PPLI holder most needs is fixture 4 — rendered first, dated, sourced.
Employer/trust premium-funding arrangements run under one of two regimes with materially different outcomes. The desk names them, renders no numbers, and routes.
Gate: no split-dollar figure renders on this desk without counsel. This panel exists so the routing is visible, not to compute.
Who owns what — and what each arrow costs. Ownership is the estate-tax question (E5).
Dr. Naomi & Elias Chenhousehold · $650K income · ages 44/46
owns ↓ (today) — §2042: DB in the gross estate
$2M whole life · in force yr 6premium $38,500/yr · CV $148K · basis $192K · loan modeled on E4
proposed ↓ (routed → attorney)
Chen Family ILIT — proposednew-issue to trust avoids §2035(a) · Crummey log = the evidence · POL.inst.001 proposed
attorneyCPAinsurance professional
Every premium papered — source account, date, instrument. If the ILIT executes, premium gifts route through it and the Crummey clock starts per gift.
Date
Movement
Amount
Paper
Rule: an unpapered premium is a flag, never a silent fix. Post-ILIT, unlogged gifts break the present-interest position — the ledger and the Crummey log reconcile.
The proof room. A figure stays modeled until its object verifies — verification happens on the professional side, never here.
Object
ID
Status
Gate
What an examiner — or a beneficiary’s counsel — would ask for, assembled as you go.
Question
Authority
Answer lives in
Status
Deadlines derived from the facts on this desk — generated, not typed.
Date
Item
Derives from
Ask in plain words. Answers stay gated — the aide explains the desk; it never advises.
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Gate: the aide cites the panel and the statute, names the professional who owns the call, and stops.
This workstation organizes policies, structure, and evidence. It is not a law firm, accounting firm, or insurance producer and does not provide legal, tax, or insurance advice or recommend any product; every illustration is a model, every determination routes to the licensed insurance professional, attorney, and CPA named on its panel. Modeled illustration, not a quote. Demo · sample data — the people and numbers are fictional.
Close
What am I looking at?
Permanent life insurance is where good families make expensive mistakes, because the pitch shows one column and the contract contains another. This desk models the wrapper without selling it: every projection shows the guaranteed column beside the illustrated one, every permanent policy sits beside its buy-term compare, and the one catastrophic trap — a policy that lapses with loans outstanding — is rendered next to every loan figure. Nothing here is a quote or a recommendation; every call routes to the insurance professional, attorney, or CPA who owns it.
The tabs: Command (the whole picture) · 7-pay/MEC (the line a policy must never cross) · Two columns (guaranteed vs illustrated) · IRR crossover (the honest metric) · Loans & lapse (the trap) · ILIT pair (income-tax-free ≠ estate-tax-free) · Term compare (the standing alternative) · 1035 (exchange basis) · PPLI (status, heavily gated) · Split-dollar (named, routed) · then the structure map, premium ledger, evidence vault, audit file, and calendar every desk carries.
Words, translated:MEC — a policy that failed the 7-pay test; loans become taxable forever. Guaranteed column — the contract’s floor; everything above it is marketing. Phantom income — a tax bill from a lapsed loan with no cash behind it. ILIT — a trust that owns the policy so the death benefit stays out of the estate. 1035 — a tax-free policy swap where basis carries. Modeled — hypothetical until its proof document exists and a professional signs.