What is the definition of Split-Dollar Life Insurance Plan?

A Split-Dollar Life Insurance Plan is an agreement where premium payments are shared by the employer and the employee. This is not an insurance policy, but an arrangement as to what portion of the premiums are paid by the employer and the employee, as well as how aspects of the policy will be split. This includes the ownership of the policy (and related rights), cash values, as well as the death benefits.

The employer uses a split-dollar life insurance plan to ensure that the employer contributes to the plan. In the event of the employee's (who is the insured person) death, the employer gets back what it paid for the premiums, and the balance is paid to the beneficiaries.

An insurance policy with a split-dollar agreement may also be used by an employer to help fund retirement income.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage