Split dollar is a financial arrangement where two parties—typically an employer and employee, or an individual and trust—share the costs and benefits of a permanent life insurance policy. The agreement outlines who pays premiums, who owns the policy, and how the death benefit or cash value is divided.

There are two common structures: the endorsement method, where the employer owns the policy; and the collateral assignment method, where the employee owns the policy and repays the premium later. This strategy is often used for executive retention, estate planning, or tax-advantaged wealth transfer. It requires careful legal and tax structuring but can offer powerful results with reduced financial strain.