Split-Dollar Life Insurance Isn’t Only an Executive Benefit for NCAA Coaches

Split-dollar life insurance can help universities attract and retain top coaches and smaller organizations and nonprofits better compete for top talent.

March Madness brings thrills, frustration, and a little heartbreak for most college basketball fans. For the men’s and women’s National Collegiate Athletic Association (NCAA) coaches who are directly involved in March Madness, how their teams perform can spell enhanced career longevity or an impending exit.

Recognizing that collegiate coaching careers may include salary ups and downs and even periods of unemployment, coaches are often especially interested in deferred compensation plans and other executive benefits strategies to help them manage their earnings, bonuses, and capacity to plan for a stable retirement.

No wonder many top coaches, and the universities that employ them, value the use of split-dollar life insurance as either an effective standalone executive benefit or as part of a well-designed nonqualified deferred compensation plan (NQDC).

While using split-dollar life insurance makes headlines when it involves well-known coaches, this strategy can be highly effective for many organizations, including nonprofit entities that find themselves competing with bigger organizations for top talent in the marketplace.

Learn more about which top universities are attracting and retaining top coaching talent by using split-dollar life insurance agreements by reading: Retaining Key Talent with a Split-Dollar Life Insurance Agreement.

Defining Split-Dollar Life Insurance

The following information from the Treasury Regulations helps define split-dollar life insurance.

Treasury Regulations Section 1.61-22(b) defines split-dollar life insurance as (generally) an arrangement between an owner and a non-owner of a life insurance premium contract that satisfies the following criteria:

• Either party to the arrangement pays, directly or indirectly, all or any portion of the premiums on the life insurance contract, including a payment by means of a loan to the other party that is secured by the life insurance contract;
• At least one of the parties to the arrangement paying premiums is entitled to recover (either conditionally or unconditionally) all or any portion of those premiums and such recovery is to be made from, or is secured by, the proceeds of the life insurance contract; and
• The arrangement isn’t part of a group-term life insurance plan described in Section 79  of the Internal Revenue Code, unless the group-term life insurance plan provides permanent benefits to employees as defined in Section 1.79-0.