Every transfer that you (or anyone else) makes to the ILIT will be treated as a gift, which is potentially subject to gift tax. For example, if you transfer an existing policy to the ILIT, you have made a gift roughly equal to the current cash value of the policy. Likewise, when you make additional cash transfers to the ILIT to provide for the payment of premiums, those transfers are treated as gifts, too. If a "taxable gift" is made, a gift tax return (Form 709) must be filed. A taxable gift is a gift that either exceeds the donor's (gift giver's) annual exclusion from the gift tax or does not qualify for the gift tax annual exclusion. However, even if you make a taxable gift, which simply means a gift that must be reported in a gift tax return, no gift tax is paid until the total of all taxable gifts you have made exceeds your lifetime gift tax exclusion amount ($13,990,000 in 2025).