Endorsement Split Dollar

Endorsement split dollar plans are designed to provide valuable key person death benefits to a business and personal death benefit protection to a key employee's family.

A life insurance policy is purchased, and the premium payments and policy benefits are divided between two parties—usually a business and an employee.

Split dollar is a method of buying life insurance, so a need for life insurance should always exist before a split dollar arrangement is implemented.

This content is designed for use by financial professionals. Consumers may learn more about products and services on principal.com.

Key Features

Benefits to the employer

• The employer may have access to the policy's cash value.

Benefits to the employee

• Split dollar life insurance can provide needed insurance protection at a reduced current out-of-pocket cost.
  
• Split dollar can be combined with a cross-purchase buy-sell agreement to even out the current premium costs in the case of a wide age variable among the owners.

Funding and Financing

Consumer Materials

Key materials listed below. Refer to the Advanced Marketing Sales Library for more information from Pentera Group, Inc. on advanced marketing topics.

Endorsement Split Dollar Summary (BB12598)
Use with employers to provide an overview of the plan and how it works.
View (PDF)

Request for Proposal (BB12390)
Use to request a customized proposal from the Business and Advanced Solutions Case Design team.
View (DOC)

Endorsement Split Dollar Sample Agreement (BB10998)
A sample containing some of the important issues to help clients' attorneys draft the actual agreement.
View (DOC)

Endorsement Split Dollar (Tax-Exempt) Sample Agreement (BB11008)
A sample containing some of the important issues to help clients' attorneys draft the actual agreement.
View (DOC)

Combining Group Term with Guaranteed Issue Life Insurance for Key Employees (BB12653)
Offering group term life insurance and employer-owned guaranteed issue life insurance (on any of the same employees), from the same carrier, could trigger unexpected income tax consequences to key employees if an endorsement split dollar benefit is provided.
View (PDF)

Acknowledgement of Understanding (DD9700)
Use to acknowledge understanding regarding the use of guaranteed issue life insurance in an endorsement split dollar arrangement. Proposed cases need pre-approval from Business and Advanced Solutions.
View (DOC)

Producer Materials

Business Case Submission Checklist (DD849R)
Form that must be used when submitting Life applications to BMA to fund business solutions.
View (PDF)

Advanced Markets Information - Technical material for applied knowledge on a specific topic.
View Advanced Markets Information