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?

  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?

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  4. How do I list the beneficiaries of my life insurance policies if I have a trust? ...

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  5. If both the primary and contingent beneficiaries are unavailable, what happens to ...

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  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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