Split-dollar life insurance is a benefit that has been provided to executives for almost forty years and plays an integral role in financial and estate planning. This is not a kind of insurance like whole life or term. This plan is a contractual arrangement under which the costs and benefits of life insurance are shared between two parties (oftentimes an employer and employee). The agreement will provide how the parties will share the premium payments and the benefits if the policy either matures in a death benefit or is surrendered for cash. The policy is a normal policy of permanent life insurance, but the two parties to the agreement execute a separate split-dollar contract.
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Learn about the tax implications of life insurance here.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM