Definition of Charitable Reverse Split Dollar (CRSD)

financial technique for providing term death coverage for an entity. With this procedure: (1) an individual purchases an ordinary life insurance policy and completes an agreement with the entity for a reverse split dollar life insurance arrangement; (2) an individual endorses a policy's death benefit to the entity; (3) an entity assigns its interest in the policy to the charity; (4) an entity makes unrestricted gifts of cash to the charity in the form of premium payments according to the split dollar agreement; (5) an entity receives a charitable income tax deduction for gifts of cash (premium payments); (6) the policyowner ( insured) is then entitled to make a tax-free withdrawal of all or a portion of the cash value, or take out a policy loan.