1. 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

2. 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

3. 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

4. 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

5. 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