NU Online News Service, Feb. 27, 9:57 a.m. – Principal Financial Group Inc., Des Moines, Iowa, has introduced Principal Split Dollar Plus, a new split-dollar life insurance program designed for key executives at small and midsize businesses.
Employers that adopt the program pay for permanent life insurance for employees. The Internal Revenue Service treats the contributions as low-interest loans to the employees. The employees get the life insurance for the “tax cost” of the loans, Principal says.
Because employers get a security interest in the insurance, they can recover their outlays when the employees covered die or retire, Principal says.
Principal says it took recent IRS rulings on split-dollar life insurance into account when it designed the new product.