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Employee Benefits

Keeping Valued Employees

What happens if your most important employees leave?

A key employee is someone you rely on, whose skills and business knowledge may be hard to replace. Often, the future of your business depends on key employees. So it’s important to protect your business with incentives that encourage key employees to stay long-term.

It’s estimated that replacing a key employee can reach 150%–250% of their salary1.  Can you afford the added expense and time spent replacing critical employees?

Set Your Business Apart with Key Employee Benefit Plans

Often called "executive benefits," key employee benefits show employees that you value their contributions and want to them to be a part of the long-term success of the company. These benefits can help reward and motivate your most important employees; as well as distinguish you from the competition.

Life Planning Group has the Advisers and product lines to help make your employee benefits program successful.

Types of Employee Benefit Plans

  • Deferred Compensation

A portion of an employee's income is paid out at a later date, allowing the employee to defer tax payments until the income is received. Deferred compensation plans can typically include a salary deferral plan, 401(k) overlay plan, and Supplemental Executive Retirement Plan (SERP).

  • Executive Bonus Plan

Also known as a "Section 162 plan," it is an arrangement under which selected executives or key employees acquire a life insurance policy, and the policy premiums are paid by your company. It allows you to use company dollars in the form of a "bonus" to pay for the personal life insurance needs of key employees, giving them an attractive benefit of permanent life insurance.

  • Split-Dollar Plan

A life insurance arrangement in which the premiums, death benefits, and cash value of life insurance policies are shared by the company and certain key employees. For the business owner, this can provide personal insurance that is paid for with business dollars. For key employees, it can be a valuable selective benefit.

Funding Employee Benefit Plans

Life Insurance Can Be an Ideal Way to Fund Your Key Employee Benefit Plans, offering:

  • Security and Protection
  • Competitive Rates of Return
  • Income Tax Advantages - for the employer and the employee.
  • Self-Completing Benefits – The death benefit of the life insurance helps guarantee that the plan’s goals will be met in the event of death or disability.
  • Creditor Protection - life insurance cash values and death benefits may be protected from creditors, depending on state law.
  • Enhancement of Financial Statements - life insurance is given unique and favorable treatment under financial accounting rules.
  • Cost-Effectiveness - life insurance can minimize the costs of providing benefits and permit the employer to recover plan costs.
  • Flexibility - premiums, benefits, loans and withdrawals, settlement options and other features can be customized.

This information should not be construed as tax advice applicable to each individual. Please consult a qualified tax advisor regarding your individual circumstances.

1 Source: Bliss & Associates Inc., Wayne, NJ Consulting Firm, 2018