split dollar life insurance business definition

Cash value life insurance in which premiums and benefits are shared by two or more parties. For example, a business and one of its key employees purchase a $1 million policy on the employee's life, with premiums split equally between the business and the employee. At the employee's death, benefits are allocated between the two on an agreed-upon basis. Split dollar insurance is especially beneficial to younger employees, who may have difficulty affording the premiums required for a large policy.