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Insurance for Professionals and Business Owners
Strive to live your dreams. Discover the flexibility of life insurance -- protect, accumulate and transfer wealth now and in the future. Be free to live life, your way.
The benefits
TO DISABLED OWNERS:
- Maintain reserves; avoid dipping into personal income or business funds to pay expenses or to buy out a co-owner
- Assistance: policy will provide funds to facilitate the buy-out of the disabled owner
- Recovery: concentrate on getting better
TO REMAINING OWNERS:
- Business continuity: may be the difference between staying open and closing the doors
- Ownership: protects the disabled owner's interest from being passed to a family member or bought out by a competitor
Financial Independence and Security
For every stage of a woman's life
Family Focused
By now you may be settled into your career, event though you will likely change your job numerouse times throughout your life. You may have moved from living on your own to having a partner which may mean you coordinate your plans and talk about whtat your future holds together. In this stage you are also likely to have a family which means starting a college savings fund, buying a new or bigger home, and protecting your family and assets in the case of an illness, disability, job loss or other unexpected event.
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HANDLING TWO BIG CHALLENGES: SAVING FOR COLLEGE AND RETIREMENT
At this stage in your may have to handle two big financial challenges - simultaneously saving for your child's college education and saving for retirement. It can be done, but does require discipline and a realistic personalized savings plan.
To start, if you are not doing so already, consider putting as much money as you possibly can into your 401(k) or other retirement plans. If you can, also find a way to supplement those plans and open an IRA or an investment account.
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Once you have a plan for your retirement savings then you should consider setting up a college savings plan such as a 529 savings plan or any other college saving vehicle available. Since the average annual tuition for a four-year private college recently jumped to over $26,000*, it's so important to start preparing for a child's college education when they are very young. This gives you the time you need. And remember, if the numbers seem daunting and out of reach, don't get scared out of savings, because truly, every little bit helps.
PROTECT YOUR FAMILY WITH LIFE INSURANCE
As a woman, chances are you either have no life insurance or if you do, it probably is not enough.
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Supplemental Executive Retirement Plan
Recruit, Reward and Retain your best employees
How can I recruit, reward and retain key employees? Consider a supplemental executive retirement plan - one of the most flexible non-qualified plans available in the market today.
Running a sucessful business is not an easy task. As a business owner, you are required to manage day-to-day operations, oversee the development and improvement of products and services, anticipate the effects of political, economic and global events and perhaps even more important, stay one step ahead of your competitors. A solid group of top executives or key employees is critical to helping you meet all of these business objectives.
HOW A SERP WORKS
The employer chooses the key employees to participate in the plan and implements the plan with a legal document defining the following:
- Plan type
- Contribution design
- The method of crediting earnings
- Amount and frequency of employer contributions
- How benefits will be paid
The employer decides whether to informally fund the plan with an asset reserve (i.e., life insurance) that will offset future benefit liabilities. The plan administrator maintains and periodically reports employer contributions, interest credited and account balances to the company and participants. Since future benefits are merely a "promise to pay", and may be subject to "substantial risk of forfeiture", the employer can claim a tax deduction for that benefit. If the employer created an informal asset reserve, they may receive a reimbursement from the reserve for the benefit amount that was paid. The employee or named beneficiaries report the paid benefit as taxable income.
THE FOLLWING EXAMPLES SHOW HOW THE SERP WORKS BEFORE RETIREMENT AND AT RETIREMENT OR DEATH.
PRE-RETIREMENT
- The employer enters into an agreement with a key employee and promises to pay future retirement incomes.
- The company purchases a life insurance policy on the key employees and names itself owner and beneficiary. To ensure that the death proceeds of an employer-owned policy can be received by the company income tax free, it is essential to comply with the requirements of Internal Revenue Code Section 101(j).
AT RETIREMENT OR DEATH
- The employer uses the life insurance policy's cash value to provide retirement income to the key employee.
- Employees will pay income tax on the benefit and the employer treats the benefit amount as a tax-deductible expense.
Executive Bonus
- What is an executive bonus plan?
- Are you looking for an efficient way to recruit, reward and retain key employees?
- Consider an executive bonus plan - it's one of the simplest non-qualified plans available today.
An Executive Bonus Plan allows the employer to pay a bonus, or salary increase, to selected employees subject to reasonable compensation guidelines. Each employee covered by the plan then uses the bonus money to purchase life insurance on his or her own life. Alternatively, the bonus may be in the form of premiums paid directly to the insurance carrier on the executive's behalf.
Employees must pay income tax on the bonus; however, the employer can write another 'bonus' check to cover a significant portion of the income tax liability. Each bonus given will incur additional income tax to the recipient.
The employee is the owner and insured of the policy, so neither the employer nor any of its creditors will have any control over the policy's cash value. The employer, however, may elect to restrict the executive's access to the cash value through a special policy endorsement commonly referred to as "golden handcuffs". Cash value access would therefore be contingent upon the employee reaching some specific performance goals, tenure requirements of both.
Why Choose Life Insurance for an Executive Bonus?
Many business owners and their employees would assume that the most desirable bonus would be cash. Certainly, if you ask an executive how he or she would like to receive their bonus that would clearly be the preferred method. Unfortunately, the reality is that cash bonuses over time often cease to be viewed by the executive as a "benefit" and become just another part of their overall compensation. Typically, cash bonuses are spent on vacations, home renovations or debt repayment and much less commonly on benefits for the family's financial future or their own retirement savings.
If you are a business owner who considers your executives members of you family and views their families as your extended family, wouldn't it be more attractive to help them purchase something to truly benefit their family in the long term that they are unlikely to purchase for themselves? Life insurance is a flexible product that offers death benefit protection and may also offer an opportunity for the policyowner to save for his or her own future, a perfect match for an employee benefit.
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