Split dollar is a benefit policy developed for the life insurance policy customers through which they can share the premium payments and policy benefits with others. As per this agreement, benefits of the policy and the premium payments get divided in a certain manner either between an employee and a business or between two individuals. Some business houses adopt split dollar insurances to insure their employees as an employee benefit.
In the split dollar collateral assignment the policy is owned by the employee and a personal beneficiary is named for the policy. But the benefits of the policy are assigned to the organization or employer as a security or collateral for the advanced premium payments. In this scenario, the organization pays complete or a part of total premiums of the policy in advance. This split dollar collateral assignment arrangement provides a vital tax benefit as stated by the regulations of the treasury department.
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