With this plan, an employer applies for and owns a life insurance policy on a valuable employee/executive. Premiums are paid and owned by the employer. Due to the cash values and death benefits, Key Employee policies result in little or no cost to the employer and, in many cases, lead to a profit. The cash value of the policy is an asset to the employer and may be borrowed or withdrawn for emergencies or temporary working capital.

These plans can carry benefits to both the employee and employer both today and in the retirement years.

Highlights are:

• Employer Indemnification– a formula can be followed that will determine the amount insurance coverage the employer needs to purchase to be reimbursed for lost services of the executive or key employee.
  
• Ownership Redemption-if the executive or employee owns an interest in the firm and this interest will be redeemed at death, the insurance should also cover the cost of expected redemption.
  
• IRC Section 303 Stock Redemption– If the employer is a corporation and the executive or employee is a stock holder whose stock value exceeds 35% of their adjusted gross estate, the benefits of the 303 stock redemption are best funded with a corporation-owned life insurance policy.
  
• Death Benefit Only Salary Continuation Plans– this agreement with the executive or employee promises if the executive or employee dies prior to normal retirement while still employed at the company, the employer will pay a certain amount of the income to the executive or employee’s family.
  

Contact Brian to determine which plan works best for you, your company and executive or employee. There can be tax and profit benefits to all the parties involved.