Offer a benefit with mutual protection

Protection for the business and your employee

One of the best ways to keep highly valuable employees is to offer fringe benefits. One benefit that can be mutually beneficial to you as the business owner and valued employees is a split-dollar plan.   

How split-dollar works

Through a split-dollar plan, you enter into an agreement with your employee through which you share the rights and obligations of a life insurance policy.

As the business owner, you generally pay the policy premium and your employee, as the insured, has the benefit of life insurance protection at an affordable cost. The benefit continues as long as the split-dollar is in force (typically as long as the employee works for you). If the employee leaves the company or passes away, you have certain rights in the policy, depending on the type of split-dollar plan chosen.

Types of premium splits

The most common is the employer-pay-all design – your business pays all premiums and the employee pays taxes on the benefit as compensation.

Through a contributory plan, your employee pays pay part of the premiums (usually the amount treated as taxable income) while your business pays the rest.

You can also give employees a salary increase bonus to pay part of the premium that’s taxable income to the employee, and can be deducted by your business. Or, you can pay a larger bonus to cover the employee’s taxes. There's some flexibility.  

Split-dollar plans can help you:
Offer a benefit with mutual protection   

Your employee gets life insurance protection while your premiums may be returned on the benefit if the employee leaves the company or passes away.

Select who qualifies

Unlike a qualified retirement plan, you can be selective when you choose which employees get this benefit.

Have flexibility in policy design

From how premiums are paid to who owns the policy, split-dollar plans can be designed to meet the needs of your business.

A bit of guidance can help

While simple in concept, a Split-Dollar plan is best established with the help of your financial professional.

Our network of financial professionals can help you answer: 
  • What type of Split-Dollar best meets your business needs
  • Which type of life insurance policy would work best
  • How much coverage and premiums should be considered

Want to learn more about life insurance?

  Whole life insurance LEARN   Universal life insurance LEARN

Life insurance is issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Guarantees are based on the claims-paying ability of the issuer. Loans and withdrawals may reduce the death benefit, cash surrender value and any living benefit amount.

Products, product features, and rider availability vary by state. Issuer not licensed to conduct business in NY.

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