Survivorship Split Dollar Insurance

Definition - What does Survivorship Split Dollar Insurance mean?

Survivorship split dollar life insurance is an arrangement in which two parties split the costs and benefits of a survivorship life insurance policy. It is often used as a workplace benefit that helps employees buy survivorship life insurance at a more affordable cost. In this situation, the employer covers a portion of the insurance premiums so employees do not have to pay the full market rate for coverage. This gives them one more incentive to stay at the company.

Insuranceopedia explains Survivorship Split Dollar Insurance

Under a split dollar plan, employees can often choose from a few different types of life insurance coverage. If employees participate, they buy a permanent insurance policy based on the lives of two people, rather than one. The policy will only pay out the death benefit after both insureds die.

As a result, these policies have a lower monthly premium for the same amount of coverage as regular permanent life insurance. With the split dollar feature lowering prices even more, employees are able to buy even more coverage for the same out-of-pocket cost.

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