Endorsement split dollar is a life insurance arrangement in which the employer owns the policy and endorses part of the policy benefits to an employee or the employee’s beneficiary. In plain language, the employer keeps policy ownership, while the employee is given specified life-insurance rights through an endorsement.
How the endorsement method works
In the endorsement method of split-dollar life insurance:
- the employer is usually the policyowner
- the employer controls the contract
- the employee receives a stated beneficial interest, often in part of the death benefit
- the details are created by endorsement and related agreement documents
This is different from arrangements in which the employee owns the policy and the employer merely helps fund it.
Why the structure matters
The arrangement matters because ownership, beneficiary rights, and access to policy values can be split in different ways. Insurance professionals need to know:
- who owns the contract
- who names the beneficiary for the endorsed portion
- what happens when employment ends
- whether cash-value rights remain with the employer
Those questions affect both plan design and claim payment.
Practical example
A company buys a life insurance policy on a key executive and remains the policyowner. Through an endorsement, the executive’s family is given the right to receive a specified portion of the death benefit if the executive dies while covered. The employer retains the policy and any rights not transferred by the endorsement arrangement.
Related Terms
- Endorsement
- Policyowner
- Beneficiary
- Cash Value Life Insurance
- Whole Life Insurance
- Employee Benefit Program