Split-dollar Life Insurance

What Does Split-dollar Life Insurance Mean?

Split-dollar life insurance is a type of policy jointly purchased by a company and its employees. Typically, the employer is designated as the “policy owner,” while both the employer and the employee share the premium costs and the policy benefits.

Insuranceopedia Explains Split-dollar Life Insurance

Split-dollar life insurance policies are popular for several reasons. First, they offer a cost-effective way for employers to provide benefits to their employees. Second, the death benefits for both parties are typically income tax-free. Third, the premium payments are shared, alleviating the financial burden for both sides. Lastly, it is often more convenient for employees to obtain a life insurance policy through their employer rather than conducting extensive market research to find a suitable plan on their own.