Additional Protection for Key Executives

Executives often require greater death benefit protection than standard group plans provide. Offering additional life insurance benefits can better meet their needs and help your organization attract and keep top talent.

Access to Cash Value

A business owner with a whole life insurance policy can borrow from its cash value for needs like business stability, covering overhead costs, or extra cash flow.

Provide Executive Bonus

A company may assist key executives in acquiring additional life insurance coverage through an executive bonus plan. Under this arrangement, the executive holds ownership of the policy and is responsible for premium payments, while the company provides a bonus to offset the cost of premiums and associated tax liabilities. The executive has the option to access the policy’s cash value for supplemental retirement income or other needs. In the event of the executive’s death during employment, the policy’s death benefit is typically payable to the designated beneficiaries on an income tax-free basis.

Succession Planning

A life insurance policy is commonly used in business succession planning. In a buy-sell agreement, death benefits can fund the purchase of a deceased partner’s share, preventing disputes and ensuring smooth operations. For one-way agreements, the successor may use the policy’s cash value to buy the company upon the owner’s retirement.

Estate Equalization

In family businesses, some members are active, while others are not. Dividing the business equally can cause conflict. A life insurance policy in your estate plan can provide a death benefit to non-active members, matching the value of the business left to those taking over ownership.

Key Employee Retention

A company can use a life insurance policy to fund deferred compensation for a key employee. The company owns the policy, using its cash value for supplemental retirement income when the employee retires. If the employee dies before retirement, the proceeds go to the company, which can recover premiums and provide a death benefit to the employee’s family.

Key Person Insurance

The loss of a key employee can cause companies to lose revenue and face other challenges. Life insurance can help by providing a death benefit that covers expected revenue losses and the costs of hiring a replacement.