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.