KEY EMPLOYEE PLANS

Attract and retain quality employees

Split-dollar life insurance is another benefit you can offer your employees while investing in your company.  Here, the business purchases a life insurance contract on the life of an employee and shares the cost. If the employee dies, your business receives an amount equal to the premiums paid, and the employee’s beneficiary receives the remaining death benefit. If the policy is surrendered for any other reason, your business receives the cash value.

Deferred compensation that supplements a retirement plan is another option you might consider. Your company would buy a life insurance policy on the life of a key employee. The business is the owner and beneficiary. If the employee dies, the business receives the death benefit tax-free. From the benefit proceeds, your business pays an annual sum to the employee’s survivors for a specified period.

Providing group life insurance as an employee benefit can also help your business by attracting and retaining employees. Group insurance is less expensive to purchase than individual insurance. Also, no medical exam may be required, depending on the size of your company. Here, the premiums are tax-deductible to your business, and the benefits are paid directly to your employee’s beneficiary.