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Life Insurance and Disability

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  • BCG Understands Executives’ Unique Insurance Requirements
    In today’s hyper-competitive business environment, attracting and retaining top executives is more challenging than ever. Benefit Consulting Group (BCG) provides innovative executive benefit solutions that give businesses a competitive edge. We provide the products, services and expertise that “levels the compensation playing field”, helping you to compete with your largest competitors for top talent. We offer your executives the sophisticated products and services they seek to overcome IRS-imposed limits that apply to the highly compensated employee.

    Insurance-Funded Deferred Compensation Plans
    Deferred executive compensation plans are gaining in popularity as competition for the most talented executives increases. A well-designed deferred compensation plan can allow a smaller company to compete with larger companies that are better able to pay direct compensation.

    The objective of the deferred compensation plan is to allow selected executives to defer W-2 income and lower their current tax liability. The deferred dollars are invested in either a mutual fund family or into a variable life insurance policy, typically Variable Universal Life. The key benefit of using life insurance is that earnings are not taxed each year as they are with other types of investments. At the time of payout to the retired executive, dollars are taken out of the Universal Life policy by the company who owns the policy in the form of a loan. These dollars are not considered income to the company. Instead, they are expensed as salary when paid to the executive. When the executive dies, the company will recover loan dollars by receiving the income-tax-free death benefit from the policy.

    This unique tax leverage allows more dollars to be paid out to the executive with lower overall cost to the company.

    Some plans also promise to pay the executive's spouse a benefit if the executive dies before retirement. Others will pay the executive a certain amount in the event of disability. Often life and disability income insurance policies are used to help fund the payments.

    An Effective Tool to Attract and Retain Top Executives
    The use of a well-designed deferred compensation and disability plan can provide the top executive you wish to hire the type of long-term benefit package he or she desires to make the decision to join you—at a lower cost than through direct compensation. Due to the long-term nature of the plan with it’s increasing benefits, a deferred compensation plan can also be a very effective tool for retaining top talent, particularly when there is little or no chance of the executive owning stock in the company.

    Your BCG consultant will work closely with executive and employer to review the many available options and propose a plan that builds the strongest compensation plan to meet your future financial goals. Executive Life Insurance
    Highly compensated executives have unique needs in terms of total compensation planning, tax deferral, estate planning, and life insurance. BCG regularly works with highly compensated executives, business owners, and retirees to establish sustainable personal financial plans. Because executives’ financial plans are inextricably linked to their employment, we work closely with employers to provide innovative solutions to attract and retain the most capable executives, providing a broad array of services including sophisticated life insurance strategies.

    Life Insurance Is So Much More Than A Check At Death!
    Life insurance is most often thought of as a way to provide money to survivors of someone who dies that will help to pay the bills and pay for burial costs. But life insurance is far more flexible and valuable for protecting your loved ones and your lifestyle! You can use life insurance to:
    • Pay for children’s education
    • Pay mortgages and debts
    • Create an estate for your heirs
    • Pay estate taxes when you leave an estate to your heirs
    • Balance inheritances between siblings and heirs
    • Give money to charity
    • Provide income for survivors
    • Provide income for you while still living
    • Guarantee of future insurability
    • Secure a line of credit for personal or business needs
    What Type of Life Insurance Is Best For You?
    There primarily three types of life insurance that you can use to accomplish all of the above. Each has its distinct benefits:

    Whole Life Insurance that provides a death benefit plus provides an accumulating cash value. The death benefit is guaranteed and you can borrow from the cash value. Whole life insurance’s greatest feature is that the annual premium you pay will never increase. Learn more!

    Universal Life Insurance, like whole life insurance, offers a death benefit and a cash value component that grows tax deferred, but universal life insurance offers more flexibility to change the policy as your life needs change. For example, with a universal life insurance policy, you are able to change the amount of death benefit and the amount you pay annually to fit your needs without surrendering the policy and buying a new one as you would have to do with a whole life insurance policy. Learn more!

    Term Life Insurance provides a death benefit only and is the least expensive type of life insurance available. A level-premium term life insurance policy can be purchased where you pay the same premium amount each year for a given period, usually up to 20 years before the premium begins to rise with your age. Learn more!

    Using Life Insurance To Build And Protect A Business
    Life insurance for businesses offers a number of innovative solutions that can help you grow your company. Following are just a few ways the flexibility of insurance can be utilized:
    • Secure a line of credit your business needs to operate and grow
    • Fund a business buy/sell agreement
    • Insure key employees to ensure business continuation in the event of a death
    • Transfer the cost of risk
    • Provide employees with a valuable benefit
    Life Insurance Quote
    Your BCG consultant can provide detailed information and examples of various scenarios to help you plan. With more than 170 wealth management, benefit and HR specialists, risk management experts and insurance professionals, we’re able to fully and efficiently integrate executive life insurance into your current retirement plan or to assist you in designing a more comprehensive plan. Income Protection A Unique Concern for The Highly Compensated—Supplemental Disability
    While group long-term disability insurance provides a base income for employees who are unable to work due to a disability, the highly compensated often need supplemental disability to provide a greater level of income protection.

    MetLife’s Seventh Annual Employee Benefit Trends study found that nearly one third of highly compensated employees, those earning $100,000 or more annually, had no disability insurance beyond any basic disability insurance provided by their employer.

    Most employer-provided long-term disability insurance covers up to 60% of an employee’s salary excluding bonuses and commissions. But highly compensated executives may find that the employer-paid disability insurance equals less than 50% of their take-home pay. In addition, employer-paid premiums are typically taxed as income to the employee.

    For the highly compensated executive wishing to protect the highest amount of their current pay should they become disabled, supplemental disability insurance is the answer. When combined with other disability coverage, supplemental disability insurance can cover a majority of the executive’s income including other sources of income such as bonuses and commissions. All premiums paid by the executive with after-tax dollars is also tax-free when the benefits are paid. Another benefit of supplemental disability insurance is that the employee can take the coverage with them should they leave the company. A Full Suite of Services For Business Owners and Executives
    BCG offers one of the largest portfolios of products and services to meet the needs of businesses and individual executives. BCG works closely with employers and highly compensated executives to design effective compensation programs. With more than 170 specialists in wealth management, employee benefits and human resources, risk management, and financial planning, we are able to ensure that all components of an executive’s financial plan are efficiently and effectively integrated.
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