Categories
Insurance

Split-dollar insurance policy explained

This is not an actual insurance policy.

Many people who are looking for cheaper life insurance end up looking into split-dollar insurance policies. However, this is not actually a type of insurance policy. Therefore, it’s probably important for you to see the so-called “split-dollar insurance policy” explained.

Split-dollar is actually an arrangement that has an effect on how you pay for your insurance premiums, and how much money you get back if you need to cash in the insurance policy at some point in the future. What happens with a split-dollar agreement is that more than one person or group of people agree to go in together on a life insurance policy. The result is that you may be able to get a life insurance policy without having to pay too much money on your premiums. This is also a good idea if you are looking to get permanent or semi-permanent insurance, but you don’t think that you’ll be able to pay for it all on your own.

Most of the split-dollar insurance agreements are between an employer and employee. The reason for this is that with this insurance agreement, an employer will be able to make sure that important employees are both insured, and that they’ll be able to start saving for their retirement plans. Employees who have insurance and other benefits are obviously more likely to stay with their current employers.

However, there are a few disadvantages to the split-dollar agreement, just like there are to any other insurance policy options. For instance, the split-dollar agreement also requires that the other person in the policy with you is going to be able to continue paying their part of the premiums. If you’re worried that your employer will not be able to pay that amount every month, or if you do not trust your employer, then you may not want to go into a split-dollar agreement.

The other thing that you should consider is that since split-dollar agreements involve the sharing of a life insurance policy, there is a lot more attention paid to them by tax agencies like the IRS. Therefore, you should always make sure that your split-dollar agreement is following all of the tax laws that apply.