Split-Dollar Insurance Agreement (Endorsement Method)
A split-dollar arrangement is a strategy in which a life insurance policy's premium, cash
values, and/or death benefits are split between two parties (owner and non-owner). It
is not a type of life insurance or a reason for buying life insurance; rather, it is a method
of financing the purchase of life insurance. Split-dollar is generally most appropriate
when one party (the company) has the cash to pay the premiums for life insurance
and the other party (the employee) has the need for life insurance. Depending upon
the method of split dollar used, the policy owner may be the employer, the insured/
employee, and the insured's trust or a third party.
There are two common forms of structuring the ownership of a split-dollar insurance arrangement: endorsement or collateral assignment. When an endorsement split-dollar arrangement is used in a business context the employer typically pays the premiums on a life insurance policy on the life of the employee.
North Carolina Split-Dollar Insurance Agreement (Endorsement Method)
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