Charitable Split-Dollar Insurance Plan

DEFINITION of 'Charitable Split-Dollar Insurance Plan'

Identical to a standard split-dollar insurance plan, except that a charity, instead of an employer, owns the life insurance policy. Charitable split-dollar insurance plans pay death benefit proceeds to the beneficiaries of the donor, just as standard plans pay proceeds to the beneficiaries of the employee.

BREAKING DOWN 'Charitable Split-Dollar Insurance Plan'

Taxpayers cannot deduct the contributions they make to a charity that are earmarked as premium payments anymore. This loophole was closed when the laws for standard plans were updated in 2003.

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RELATED FAQS
  1. Do beneficiaries pay taxes on life insurance?

    Learn how life insurance proceeds are generally not taxable to the beneficiary, but understand the unique situations in which ... Read Answer >>
  2. What is the difference between the death benefit and cash value of an insurance policy?

    Understand the difference between the various components of a life insurance policy including the death benefit and a policy's ... Read Answer >>
  3. How are contingent beneficiaries informed of a payout?

    Understand how contingent beneficiaries are made aware of a policy payout, and learn what policy owners can do to ensure ... Read Answer >>
  4. How do I list the beneficiaries of my life insurance policies if I have a trust? ...

    Because most states protect life insurance policies from creditors, most buyer questions come from the confusion created ... Read Answer >>
  5. If both the primary and contingent beneficiaries are unavailable, what happens to ...

    Understand the difference between primary and contingent beneficiaries and what happens to assets when neither are present ... Read Answer >>
  6. What are the restrictions for naming a given individual as my contingent beneficiary?

    Understand what restrictions may exist, depending on your state and the policy you choose, on naming your life insurance ... Read Answer >>
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