While Split-dollar life insurance is more of a classic agreement between the employee and the employer. In this kind of arrangement, both the employer and employee agree to share both the costs and benefits of the life insurance policy. For a Split Dollar life insurance to be effective, there must be a written document giving details on how premiums, dividends ownership, cash value, and death proceeds are to be shared. This initiative is generally used as deferred compensation and an incentive too. This policy is beneficial to both the company/employer and employees.
Advantages of a Split-Dollar Life Insurance
Employer Benefits
An employer who takes a split-dollar life insurance stands to gain a lot concerning the following merits;
Improved relationships
A company’s success can be influenced by how you relate to your employees. Engaging in this policy helps in building stable relationships with your employees. With this kind of insurance arrangement, you can easily win your employees’ trust and loyalty.
Increased productivity
A happy workforce will naturally lead to high productivity in any company. Your workers want to feel treasured and valued. As an employer, you don’t want to keep losing your best employers to your Tucson rivals. Split-dollar insurance is a sure way of motivating your employees to work harder and smarter to achieve the company’s productivity goals efficiently.
It’s not complicated but rather appealing
Split-Dollar life insurance has minimal complications. In fact, most employers find this kind of policy appealing. For instance, it does not require bulk paperwork, does not involve long-term employers costs, and employers have more control over the policy. Lastly, split-dollar life insurance does not have to be handed over to insurance regulatory authorities at any point and employers somehow retain complete flexibility.
An employer also has a say on the policy’s cash value
Any single employer who invests in any form of split-dollar life insurance as a say on the policy’s cash value. This advantageous to the owner since the cash value can be used as a reserve fund for any emergency or employee special retirement package. Additionally, upon an employee’s death, the company receives all the paid premiums on behalf of them.
The advantages to the employee
Cheaper life insurance
Split-dollar life insurance is a cost-effective policy for employees. Since both the employer and employee contributions to towards the plan, it makes it advantageous for workers since they gain premium coverage cheaply.
It’s an excellent way of protecting your loved ones in case of an untimely demise.
Everyone wants to pass on after covering his or her family. One can afford to rest in eternal peace knowing that their loved ones are well protected. Interestingly, split-dollar life insurance can be used for estate liquidity in case an employee died abruptly.
Are you in Tucson and need sound advice on Split-Dollar Life Insurance? Just talk to Global Investment Strategies experts.
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