How Does A Split-Dollar Life Insurance Policy Work? 
A split dollar life insurance policy is not a type of insurance , but a way of paying for and collecting on life insurance so that it benefits two parties , usually an employer and employee . The policy is taken out on the employee as a benefit , reward , and/or way to retain them . Premiums and benefits are `` split '' by the two parties . The way the split dollar life insurance policy works involves how premiums are paid , who owns the policy , and how to divide the death proceeds , cash values and/or dividends.There are two popular ways to structure split dollar life insurance . Both designate the employee as the Insured . 1 -RRB- Endorsement . The employer is the owner of the policy and endorses it so that some or all of the death benefit will go to the choice of beneficiary of the Insured , when the insured employee dies . 2 -RRB- Collateral Assignment . The employee owns the policy and collaterally assigns some of the death benefit to the employer as reimbursement for premiums paid . To find out the best way to structure split dollar life insurance for business or family purposes , it is important to have correct financial and legal advice . Call a reputable life insurance agent or agency to start working on your split dollar life insurance policy . 