Small Business Question - Life Insurance

[myinsurebiz]

I am writing a FE policy for the owner of a small business with 4 employees.

He wants to provide $50 single - $100 family a month to each employee to be sure they have Life Insurance to provide protection to their family just as he is for his family.

I have never done this. Questions:

1) He doesn't want to be the Payor or anything else. Is his "bonus" tax deductible to his business?

2) Is the "bonus" taxable to the employee?

3) The employee will be owner of the policy.

4) He would like them to get Whole Life. Can he stipulate such?

5) Suggestions on how to do this?

 

[DHK]

Here you go:

Executive Bonus Plan In Action:
http://finsecurity.com/finsecurity/pdfs/compliance/2b4-02.pdf

 

[myinsurebiz]

Simple as that - cool . . .

Does the bonus amount have to equal the premium amount?

Say the Employer gives $50 to Employee and the premium is only $38?

Or - does the employee have to submit premium documentation of some sort?

Here you go:

Executive Bonus Plan In Action:
http://finsecurity.com/finsecurity/pdfs/compliance/2b4-02.pdf

 

[DHK]

There are a few things you can do with that.

1) Depending on the product you're using, use the difference to add more cash value to the policy.

2) Use the difference to help pay the taxes on the additional compensation received.

3) (Probably most common) Set up a VPD (voluntary payroll deduction) plan where the insurance company sets up a list-billing. The employees pay for the coverage, but the business is the one writing the physical check - just like with health insurance and other payroll deduction services.

 

[myinsurebiz]

There are a few things you can do with that.

1) Depending on the product you're using, use the difference to add more cash value to the policy.

2) Use the difference to help pay the taxes on the additional compensation received.

3) (Probably most common) Set up a VPD (voluntary payroll deduction) plan where the insurance company sets up a list-billing. The employees pay for the coverage, but the business is the one writing the physical check - just like with health insurance and other payroll deduction services.

Thanks for helping!

Several members sent me some PM's and even talked to a guy in California for about 90 minutes last night. He had some awesome advice. Especially about how the Employer can use the contributions as a "retention" tool.

He even enlightened me on fully underwritten UL for the healthier / younger employees. More benefit for their buck + accelerated cash value for the later years . . .

I understand the basics of section 162 now. I have a lot to study and learn about on the UL products. But - it doesn't seem to be rocket science

Thanks again

 

[goillini52]

Thanks for helping!

Several members sent me some PM's and even talked to a guy in California for about 90 minutes last night. He had some awesome advice. Especially about how the Employer can use the contributions as a "retention" tool.

He even enlightened me on fully underwritten UL for the healthier / younger employees. More benefit for their buck + accelerated cash value for the later years . . .

I understand the basics of section 162 now. I have a lot to study and learn about on the UL products. But - it doesn't seem to be rocket science

Thanks again

It wasn't DHK you talked to was it? He's in California.

 

[DHK]

Nope... it wasn't me.

 

[myinsurebiz]

It wasn't DHK you talked to was it? He's in California.

Nope - but he did post the list to the pdf that illustrated just how simple it is.

 

[goillini52]

Nope - but he did post the list to the pdf that illustrated just how simple it is.

Damn Lamb Chops, that light blue print about blinded me! That's hard on the eyes.

 

[myinsurebiz]

Damn Lamb Chops, that light blue print about blinded me! That's hard on the eyes.

Dang - I fixed it . . . Want use that part of the rainbow anymore. Wonder if *icky will approve