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Split Dollar Life Insurance
 
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Split-dollar describes a method of paying for insurance by splitting the premiums and proceeds between the employer and the employee. A typical plan splits the death benefit, premiums and ownership of a life insurance policy between an employer and an employee. Usually, the employer pays the majority of the premium, has limited ownership rights and receives a specified amount of the death benefit proceeds. 

Employers can attract current and new employees buy assisting them in purchasing much needed life insurance. 

Main reasons for a split-dollar plan: 

Employers: 

• Can select the participants and have access to available cash 
• Can provide plans at little impact to financial statements 
• Will receive a return of premium at an employee’s retirement or death 

Employees: 

• Can obtain life insurance at a minimal cost 
• Can take over policy at retirement 
• Access to cash value at retirement 
• Receive an income-tax-free death benefit 






    

  1. Life insurance is established 

  2. The business pays most of the premium and employees pay the balance 

  3. At death, Income-tax-free death benefit proceeds are paid 

  4. The business receives proceeds equal to total premiums paid 

  5. The employee’s beneficiary receives the balance of the death benefit 


How it works? 








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