Split Dollar Life Insurance
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Driving HealthCare Solutions.
Split-dollar describes a method of paying for insurance by splitting the premiums and proceeds between the employer and the employee. A typical plan splits the death benefit, premiums and ownership of a life insurance policy between an employer and an employee. Usually, the employer pays the majority of the premium, has limited ownership rights and receives a specified amount of the death benefit proceeds.
Employers can attract current and new employees buy assisting them in purchasing much needed life insurance.
Main reasons for a split-dollar plan:
• Can select the participants and have access to available cash
• Can provide plans at little impact to financial statements
• Will receive a return of premium at an employee’s retirement or death
• Can obtain life insurance at a minimal cost
• Can take over policy at retirement
• Access to cash value at retirement
• Receive an income-tax-free death benefit
- Life insurance is established
- The business pays most of the premium and employees pay the balance
- At death, Income-tax-free death benefit proceeds are paid
- The business receives proceeds equal to total premiums paid
- The employee’s beneficiary receives the balance of the death benefit
How it works?
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