Split Dollar Life Insurance
Life protect is protection product which provides a cash sum if living confident were to experience deaths. The can be taken on a single life confident or joint life confident basis. The plan proprietor must pay regular rates to the insurance provider.
Unlike home or auto insurance plan the plan proprietor is not taking out protect to protect a known valuable of tangible value. Rather the plan proprietor is protecting the family, mortgage or dependents from the consequences of living confident suffering death. There are many variations of life insurance/life assurance, each having an alternative purposes for use.
Split Dollar Life Insurance
A type of insurance plan coverage were the plan proprietor receives protect from the insurance plan company on living confident for a specified number of years. The minimum term plan is usually 5 years, the plan proprietor can choose a term plan to suit his/her requirements but typically 10, 15, 20, 25 and 30 year terms are chosen.
Term plan insurance plan is taken out for a fixed quantity of protect say £100,000. This quantity remains constant at £100,000 throughout the word of the plan. Therefore if living confident were to experience deaths the payment would be the full quantity of £100,000.
Reducing term plan split dollar life insurance ilit plan
Reducing term plan insurance plan is taken out with an initial quantity of protect say £200,000. The protect quantity reduces to £0 over the full term plan of the plan. This type of protect is an ideal protection for a capital and interest repayment mortgage.
If living confident were to experience deaths at some point within the word of his/her mortgage and insurance plan coverage term plan the payment would be enough to clear the balance of the remaining mortgage. Therefore removing this debt for the remaining family.
Collateral assignment split dollar life insurance
Unlike term plan insurance plan a renters insurance plan coverage is not restricted to a period of time for the sum confident to experience deaths. This insurance plan is guaranteed (subject to a valid claim) to payment on death of living confident, the plan proprietor must continue to pay prices, therefore the longer living confident lives the more rates are paid.
Split dollar life insurance example
However if living confident were to die after the first 2 years of starting the plan then the insurance provider will payment the claim. This type of insurance plan is ideally used to protect private split dollar life insurance arrangements, or to protect an inheritance tax liability.
There are a number of additional features offered by insurance plan coverage companies in connection with a insurance plan coverage coverage some of these are listed below: –
Terminal sickness cover
Critical sickness cover
Waiver of premium
Terminal sickness protect
This should NOT be confused with the more comprehensive crucial sickness protect discussed later. International airport sickness protect means the insurance provider will payment the sum confident if living confident is diagnosed with a terminal sickness having less than 12 months to live.
Therefore the insurance provider will effectively payment the death benefit early allowing the remaining time to be a little easier. There are often restrictions on this benefit, whereby the plan must not be in the last 18 months, the diagnosis must be a written diagnosis.
Critical sickness protect
The split dollar life insurance taxation provider will payment the sum confident if living confident is diagnosed with one or more crucial illnesses as defined by the plan. These must include some serious forms of cancer, stroke, heart attack but often include many more. Currently the association of British Insurers have defined 23 separate crucial illnesses that most UK split dollar life insurance estate planning plan providers conform to, many often provide enhanced versions of.
Waiver of premium
This feature allows the rates to be waived if the plan owner(s) fall sick and are unable to work, its equivalent to a payment protection plan being bolted on to the split dollar life insurance executive compensation plan coverage, but this is only for the insurance plan charges.
When taking out a insurance plan coverage coverage it is advisable to write the plan under trust. This ensures that the plan will payment to the correct people, at the perfect time in the correct amounts. Trusts can be complicated so it is advisable to seek independent split dollar life insurance accounting plan coverage advice.
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