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Split Dollar is a plan that provides key employees a way to obtain Life
Insurance protection through premium and/or benefit-sharing arrangements with
their employer. This arrangement provides several advantages to the employer
and the employee.
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Low-cost option for employee to buy Life Insurance.
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Helps attract and retain key employees.
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Employer can decide which employees are eligible and the amount of benefits
each will receive.
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Insurance proceeds are received income tax-free by the employer and/or
employee.
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Additional Advantages to the Employer
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Employer is assured of reimbursement of premium paid from the Policy values of
death benefit.
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Only cost to employer is the loss of the use of funds that paid the insurance
premiums.
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Supplements other employee benefits.
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No approval is required from the Internal Revenue Service.
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Reimbursement received by the employer can be used to provide additional
retirement income to the employee.
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Additional Advantages to the Employee
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Future insurability is protected because the employee can obtain needed Life
Insurance now.
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Can be self-completing in the event of disability.
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Doesn't affect other fringe benefits. Plan can be used to fund a buy-sell
agreement among stockholder employees.
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