If the personal tax benefits of permanent life insurance aren’t enough benefits yet, and if your beneficiaries’ tax benefits are your primary concern, be rest assured, your death benefit remains untouched as long as you pay back their loans. There is no income tax on this death benefit, and if you optimize your plan, your beneficiaries can even avoid estate tax.
You can accomplish this by putting their life insurance policy in an irrevocable life insurance trust at least three years before your death; it will no longer be your personal asset, and therefore, no longer part of your estate. The trust becomes a bulletproof vault inside your bunker, safe from depletion by taxation.