What is a "Split dollar plan" primarily intended for?

A "Split dollar plan" is primarily intended for sharing the cost of insurance between employer and employee. This arrangement allows an employer to offer life insurance benefits to an employee while simultaneously sharing the premium costs for the policy. Typically, the employer pays a portion of the premiums while the employee contributes to the remainder.

This structure not only helps to manage costs but also provides a valuable benefit to employees, enhancing their compensation package. Additionally, upon the employee's death, the life insurance benefit may be utilized to repay the employer for the premiums paid, with any excess benefit going to the employee's designated beneficiaries.

The advantage of a split dollar plan lies in its flexibility and mutual benefits for both parties involved, making it a strategic option for companies aiming to attract and retain talent by offering competitive insurance options.