Big companies appear less interested in the insurance as a tool. In addition, certain legal questions about split-dollar haven't been resolved. Many people have accepted the position that when a split-dollar agreement is terminated and the policy is fully owned by the executive, the cash value transferred to the executive is not taxable. Our attorneys do not favor that belief. But other lawyers and organizations do accept that position, and there have been no court cases to settle the dispute.
Nobody really wants to mess with it too much.
Veteran insurance broker Trip Beattie discusses split-dollar agreements. The 'Golden Handcuffs' Allure More popular for executive compensation, reports Norton, are non-qualified deferred compensation plans and executive bonus plans, both of which use life insurance as a funding vehicle because of tax advantanges that accrue for the executive and the company. The package includes a sizeable life insurance component. The executive is encouraged by such promises to stay long enough to get the package, and also to help the company prosper. Insurance policies also are used in the payment of executive bonuses because they can be a way for executives to get needed insurance without having to pay the full cost themselves.