Split Dollar Plans

A Split-Dollar Plan is an arrangement between an employer and an employee to join in the purchase of life insurance. An insurance policy with substantial cash value acquired through a Split-Dollar arrangement can be used by the employee as a source of supplemental retirement income.

By splitting the premiums and ownership with the employee, the employer is guaranteed to receive the cost of the employer contribution to the plan. At the time of death, the employer will receive an amount equal to the total premiums paid and the beneficiaries designated by the employee will receive the remaining death benefit.

A Split-Dollar arrangement is an effective and economical way to attract and retain key employees by helping them achieve a sense of security at relatively no cost to the employer and at little cost to the employee. Split-Dollar plans can also be very effective where a large amount of insurance is needed by a partner or a business-owner’s estate.