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Split Dollar (More Than Just) Life Insurance

Split Dollar Life Insurance allows an employer to reward key executives and retain employees. The arrangement benefits both parties, employer and employee, so it is an important option to consider.

It truly is more than just an ordinary life insurance policy.  


Split Dollar Advantages:

  • The employer has full control over which employees receive benefits.
  • The company is reimbursed for its premium payments when the insured passes away.
  • The premiums paid by the employer are tax deductible.
  • The death benefit from the policy is exempt from income taxes.
  • The plan makes it easy for the select employees to obtain coverage. Moreover, the employee receives better coverage at lower costs.

Split dollar policies come in two forms: endorsement and collateral assignment. The first version of the insurance policy designates the employer as the owner and the employee names the beneficiary of the death proceeds. With the collateral assignment plan, the employee is the official owner of the contact and the premiums paid by the employer are secured by a collateral assignment.  

The split dollar insurance plan works by joining employee and firm in a policy purchase. The agreement stipulates that the two parties split the insurance premium costs along with the policy’s death proceeds, dividends, and cash values.

Is Split Dollar Insurance Right For You?

Other advantageous functions of split dollar life insurance include:

  • Funding severance benefits.
  • Paying for stock purchase agreements.
  • Supporting non-qualified deferred compensation plans.

Taking this approach to life insurance proves helpful to both the employee and the employer. Above all, a split dollar plan entices high talent to the company and keeps it there. A happy employee makes for a happy business and a happy customer. In the end, that’s all that matters. 


For a complimentary consultation on executive benefits including Split Dollar Agreements, Deferred Compensation or Corporate Owned Life Insurance (COLI), call our Managing Partner, Arthur Grutt at (212) 695-7463. 

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Arthur Grutt