Life Insurance Planning for Executives

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Presentation transcript:

Life Insurance Planning for Executives Step 1: Identify Insurance / Capital Accumulation Needs Common needs provide income for family if executive dies accumulate liquid funds in executive’s estate to cover taxes and expenses carry out transfer of closely held business interest Copyright 2009, The National Underwriter Company

Life Insurance Planning for Executives Step 2: Analyze existing plans Consider group-term life insurance pension, profit sharing, and other qualified plans nonqualified deferred compensation plans other insurance plans offered through employment personally owned insurance Copyright 2009, The National Underwriter Company

Life Insurance Planning for Executives Step 3: Identify objectives Common objectives provide life insurance protection at lowest tax cost maximize employee’s federal estate tax marital deduction enhance cost effectiveness of plan by giving employer control of policy cash values tie executive to company Copyright 2009, The National Underwriter Company

Life Insurance Planning for Executives Step 4: Design the plan Options include bonus or Section 162 life insurance split dollar life insurance insurance financing of nonqualified deferred compensation plans death benefit only plans using life insurance in qualified plans Copyright 2009, The National Underwriter Company

True or False? Life insurance only benefits younger executives who need a way to provide family support if they die. A life insurance plan can help maximize the employee’s federal estate tax marital deduction An employer who wants to tie a key executive to the company should use a portable life insurance plan. Life insurance can be used in a qualified retirement plan. 1. False, see page 299 2. True, see page 299 3. False, see page 299 4. True, see page 299 Copyright 2009, The National Underwriter Company