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A Controlled Executive Bonus Plan, also known as a Restrictive Executive Bonus, or Section 162 Plan, is an agreement between an employer and its key employee(s) to provide a death benefit, supplemental income, and now includes long-term care benefits.

The employee applies for and owns the life insurance policy, with the right to designate the beneficiary(ies) of the policy.  The company then pays the “bonus” premium directly to the insurance company.

The employee’s right to receive the cash value of the policy through loans, withdrawals or surrender is restricted during a time period based on age, years of service or other conditions agreed upon by the company and the employee.

If the employee terminates employment during this restricted period, the company must agree for the employee to have access to policy cash values.  The employer, at that time, may require repayment of some or all of its “bonus” premiums from the policy’s cash value in exchange for its agreement.

*Subject to agreement

A Controlled Executive Bonus Plan has two advantages to the employer:

Pay key employee(s) a bonus in the form of a life insurance premium
Can take a current deduction for the bonus

Benefits of a Controlled Executive Bonus Plan

For the employer:

Can select which key employees can participate
No mandatory eligibility and participation rules
No IRS restrictions or approval
No government forms or reports, minimal administration
“Bonus” premiums are tax-deductible
Recruit, reward and retain key employees using “golden handcuffs”

For the employees:

Income-tax free benefits paid to surviving family at death
Permanent life insurance protection
Long-term care benefits available
Tax-deferred growth of policy cash values
Income-tax free death benefits
Although the employee must report the life insurance premiums paid each year as taxable compensation, impact of this can be minimized by the employer providing a cash bonus to the employee sufficient enough to cover both the premiums and income taxes due
Unrestricted ownership of policy and its values after the restricted period ends

The endorsement is executed by the employer and employee and filed with the insurance company.  For a specified period of time agreed to by the employer and the employee, the endorsement restricts some of the employee’s ownership rights in the policy.

During the restricted period, the endorsement restricts the right of the employee to surrender the policy, assign the policy as collateral, change ownership or make a policy loan, unless the employer also agrees.  The restrictive endorsement is typically designed to expire at a defined point, usually between 5-15 years.

For more information about the long-term care benefits included in a Controlled Executive Bonus Plan, please contact your LTCi Sales & Marketing Manager.

Protecting one’s ability to earn an income remains among the most important financial planning goals for many individuals.

Without income, many financial strategies can simply derail.

Yet, many employees with employer paid LTD plans could be under-insured in the event they became too sick or injured to work.

A new study released by The American College, Employer Perspectives on Disability Benefits, conducted by the Boston Research Group, shows:

Most group Disability Income benefits are taxable.  Employees may receive a benefit that is only half their paycheck amount.
Few group Disability plans protect variable compensation.  For employees who depend upon overtime pay, commissions and bonuses, the post–disability reality could mean not having enough income to meet their expenses.
High earners are maxed out.  The maximum benefit amount in group plans limit benefits for highly compensated Executives and Business Owners.

For more information or sales ideas about Disability Income Insurance, contact your Disability Income Insurance Manager today.

Today’s life insurance products are very different from past product offerings.  We need to educate and share details of how today’s options can help solve the real life problems modern families face.

Are we asking the proper questions?  Are we creating enough of a sense of urgency to move clients to take action?

50% of American households acknowledge they don’t have enough life insurance – LIMRA

How do we turn a non-buyer of insurance products into a client who sees value in the products we offer?

It has become increasingly difficult for a client to identify the proper products, let alone the correct amounts of insurance coverage they should own.  In most cases, the consumer is intimidated with the process of buying insurance, or at least that is what past research indicates.

We need to make the process appealing and as ‘client-centric’ as possible.  If they are buying insurance, let’s do what it takes to make sure they buy it from you.

21% of consumers had no idea what type of coverage they had bought – LIMRA

Over 60% of life insurance shoppers are proactive; most often they want to either review coverage or are impacted by a specific life experience which triggered the need in their mind – LIMRA

Many families are looking to protect assets, accumulate cash savings for retirement and prepare for the possibility that they may require professional care at older ages.  We offer a product which can address all of these concerns – a single product that can meet all of these needs in one transaction!

How do we find clients?

Do you know someone who needs retirement planning?
Do you know someone who has taken care of a loved one?
Do you know someone who wants to leave a legacy behind?

Do you have anyone who fits one or more of the three descriptions above?

We want to help you deliver for your clients.  Access to accumulated cash value; money for long-term care services and/or tax favored money for heirs – let’s take a close look at how insurance can secure your clients’ financial futures.  Contact your Life Sales Rep today.

Finding reasons why your clients need LTCi can be a challenge.  You want them to understand the importance and need for the product, and also how it can impact them and their family.

Ask these 3 questions to your prospective clients to drive the point home on why having a LTCi policy is so important.

1. What’s your plan?

Your client has probably not thought about what they will do when they reach an age when they need help with tasks they are used to doing themselves.  Have they thought about where they will live, or who they will live with?  These planning questions are a great starting block to getting the LTCi sale.

2. Who do you know?

Ask your client if they know someone that has been in a LTC situation, or maybe they have even been in one them self?  If they have seen the emotional, physical and financial burden a LTC situation can have, they most likely do not want the same to happen to their family.

3. How will you pay?

Does your client know that health insurance does not cover LTC services?  Explain to them that a LTCi policy can give them the care they want and prefer.  A LTCi policy can also make sure funds are available when your client needs them, then they won’t diminish their retirement savings or have to liquidate assets.

These questions are just the beginning on how to demonstrate to your clients the need for LTCi.  Be sure to ask these questions and stress the need of LTC on your next appointment.

Our LTC Team is available to answer any questions you may have.  Contact us today.

A majority of employees have Disability Income coverage sponsored by their employer.  However, they are unaware of how much coverage their plan would provide if they were to be too sick or hurt to work.

Many individuals live with a false sense of security regarding their Income Protection plan – believing that if an accident were to occur, they would be financially set until they could return to work.

The Reality

A typical group Disability Insurance policy covers 60% of their base income.  This can be a good income replacement safety net.  However, benefits are usually taxed and the remaining after-tax monthly benefit could be as little as 42% of a person’s regular base income.

For highly compensated employees, this amount could be even lower if there is a monthly benefit cap, or if incentive pay or bonuses are not covered by their plan.

The Solution

Fill the gap by offering an Individual Disability Income insurance policy in conjunction with the Group Long-Term Disability (LTD) insurance.

This additional coverage can bring your client’s income back to approximately 80% of their pre-disability earnings and can be offered on a simplified issue basis.  With no exams or tax returns, they can buy up to $7,500 off additional monthly income protection.

Plus, when three or more lives are covered with Individual DI insurance policies and share a common employer, all are eligible for at least a 20% discount on unisex rates.

So, when your client says they don’t need an Income Protection plan because they are already covered through work, don’t let that be the end of your conversation.  Find out exactly what their plan would pay them if they were unable to work, and if those benefits would be taxable to them.  A small amount of additional coverage can put them right where they need to be: financially sound.

For more information on how you can provide your clients with the coverage they need – contact your Disability Income Specialist today.

Many Americans have the goal of retiring at age 65.  It’s assumed that at that age, one will have worked long enough to have sufficient assets which can provide income over the rest of your life.

If your client’s primary source of funds for retirement income is a 401(k) plan, they could be facing a harsh reality when it comes time to retire.

401(k) plans are generally exposed to market volatility and are taxable as ordinary income upon distribution.  If a client’s investments are down in the years just prior to retirement, they may find themselves needing to work longer to fund their retirement while hoping that their investment allocations turnaround and provide a positive return.

If a 401(k) plan is only one component of your client’s diversified retirement plan, then this may not be as big of a concern.  But if they are banking on that 401(k) to take care of them and their family after their working career, they may want to consider using an Indexed Universal Life policy to protect against downturns in the market.

Above The Match

For those who have a company match, it makes sense to contribute to the max that a company is willing to match. Any funds that would normally contribute to a 401(k) above the match can be directed into an Indexed UL policy. This will allow clients to protect themselves against negative returns since the product has a floor rate which ensures that they will never lose a single penny of their accumulated value.

With caps on the interest credited around 12% they still have substantial potential to grow their retirement fund and provide a tax free income for life.  This strategy also protects loved ones in the event of a premature death.  If your client were to pass away before retirement, their beneficiary would receive a tax-free lump sum death benefit from the Life Insurance policy.

If you have clients who are contributing to their 401(k) plan without a company match or if they are contributing funds above and beyond their company match, this concept could help them protect their accumulated account values and retire on-time.

Call your dedicated Life Marketing Specialist to find out how much income you can help generate for your client‘s retirement while protecting their accumulated funds from market downturns.

This A+ carrier will help you shape up for spring and beyond.  With underwriting strengths in many aspects, think of this carrier as your personal trainer!

Occasional cigar users (two per month or less) can qualify for Preferred Plus, Preferred & Standard Plus non-tobacco rates if there is a negative urinalysis test
Clients who occasionally use marijuana may qualify for Preferred or Standard Plus non-tobacco rates

Here are some examples for family history underwriting strengths:

Family history qualifications do not apply if the proposed insured is 60 or older for Preferred Plus, Preferred & Standard Plus classes
Family history qualifications apply only to deaths rather than disease
Family history qualifications do not apply to gender-specific cancers for opposite sex persons
Family history of deaths due to diabetes can qualify for Preferred Plus, Preferred and Standard Plus classes

Underwriting strengths for common health impairments and non-medical risks:

Mild Asthma clients may be eligible for Preferred
Mild Sleep Apnea may be eligible for Preferred with verified C-PAP usage
Treatment for cholesterol or hypertension does not exclude a proposed insured from any Preferred classes
Maximum cholesterol levels for Preferred classes is 300 with favorable ratios; 5.0 or less for Preferred Plus, 6.0 or less for Preferred, 7.0 or less for Standard Plus
Commercial pilots for regularly scheduled passenger airlines can qualify for all preferred classes
Certain private pilots with IFR/ATP rating, flying between 50-250 hours annually and 1000 or more total hours of piloting experience may qualify for Preferred and Standard Plus classes
Preferred classes may be available for occasional scuba diving if proposed insured is certified and dives less than 100 feet

Call our Life Underwriting Department today – we can help you shape great offers and get more business on the books!

Long-Term Care (LTC) is often perceived as a difficult subject to discuss, but the ultimate goal – financial security – is the same as with any other type of insurance or investment that you currently offer your clients.

Don’t let the topic of long-term care intimidate you out of a potential sale.

The next time you sit down with you clients, avoid leading with product facts and statistics.

Try asking the following questions to start the conversation:

Do you have personal experience with a family member or friend that needed long-term care?
How and where was the care provided?
How was your/their impacted physically and emotionally?
How was the cost of care handled?

After discussing these details, ask your clients how they would handle that type of situation:

Have you thought about the impact to your assets and family if you were to someday need long-term care?
Where would you want to receive care?
Could you financially absorb the cost of care?
What level of involvement would your family have in your care?

The goal is to help your clients see LTC Insurance as the solution for a situation that could significantly impact their loved ones and their financial future.

They will begin to see the valuable benefits of LTC Insurance, which creates a natural segue into a discussion on product features and details.  Suddenly, the topic you were hesitant to discuss has transitioned into an LTC Insurance sale.

We’re here to help you design a plan that is both affordable and the best solution for your clients’ needs – contact your  LTCI Sales Rep for guidance.

Professional athletes are at higher risk of injury every time they train, practice, and compete.  It’s not surprising, then, that professional athletes were among five occupations that had more than 1,000 injuries per 10,000 workers – according to the Bureau of Labor Statistics.

Getting hurt is a part of sports, but to a professional athlete it can mean a significant financial setback – or worse, the end of a career.

Each sport commands unique contract features, including guaranteed income to a player – some contracts are fully guaranteed while others allow the team to waive the contract as they see fit.

A variety of flexible solutions are now available to protect a professional athlete during their current arrangement with their professional organization or if they have not yet signed a long-term agreement.

Critical Injury/Illness

Covers professional athletes for major injuries – whether career ending or not.  Therefore, if the athlete were to tear their ACL, Achilles, Patellar, etc. and return to play the following season, they could still collect a predetermined lump sum benefit to cover loss of income during their recovery.

NFL 46 Man Roster Bonus Coverage

Player receives a pre-determined, per game benefit if the individual is on the team’s Fifty-Three (53) Man Roster or the Official League Injured Reserve List, but not on the active game Forty-Six (46) Man Roster due to an accidental injury, sickness, or disease.

Loss of Value

Not all injuries or illnesses cause career ending disabilities, but some can certainly cause a diminishment of physical ability.  An athlete may insure skill level with the “loss of value” coverage.  If a player, projected to be a first round draft pick, suffers a significant injury before the draft and isn’t selected until the third round, the athlete stands to lose a sizable contract.  This type of coverage may also be used by professionals prior to re-signing contracts.

Draft Protection

Young athletes commit their lives to reaching the big leagues.  But before a player is even able to sign a professional contract, they are at risk of losing everything they’ve worked to achieve should they become disabled due to an injury or an illness.  This will not only affect their draft value, but if severe enough, may destroy their chances of being drafted at all.

Contact Us

All plans are tailored to fit each athlete’s unique situation – which is easy when you work with as many providers as we do.  Contact us today to learn more about how you can protect your client’s financial future.

“Stevenotes” became the term used to describe public addresses given by the late CEO of Apple, Steve Jobs.  The presentations usually included the announcement of many product releases, the most significant often presented last when most listeners thought the address had reached its conclusion . . . that is until Jobs would say, “One last thing.”

Perhaps he took a cue from the Hebrew Proverbs, e.g., “Three things are too wonderful for me,” then, “four I do not understand.”

In that vein, there are five things you need to know for successful planning with your clients’ estate tax lifetime exemptions, six if you are to complete the most beneficial product sale for all.

1) Exemption amounts will drop – Currently every taxpayer can give away during life or at death a total of $12,060,000 without paying any transfer tax. But this amount (adjusted for inflation each year) will be reduced by 50% on January 1, 2026. For convenience in this article, we’ll use an even $12,000,000 for the current exemption and $6,000,000 for the anticipated reduced exemption in 2026.

2) The full exemption can be used before it drops – If a client’s net worth is large enough and he or she can do without, the easiest way to take advantage of the $12,000,000 exemption is to give it away before 1/1/2026. There will be no claw-back of the excess gift into the estate when the exemption amount is reduced.

3) Spouses have two exemptions – A married couple can transfer up to $24,000,000 of their combined net worth without gift or estate tax before the reduction.

4) Spouses can use both exemptions at the second death – If one spouse dies with any unused exemption leftover (which occurs often when all property is left to the surviving spouse under the unlimited marital deduction) his or her unused exemption can be preserved and used by the surviving spouse at the second death, but the unused exemption is preserved only if an estate tax return is filed at the first death, whether any tax is owed or not!

5) Spouses with a limited estate can take partial advantage of the current high exemptions by using all of one exemption first – One spouse can give away $12,000,000. Even after the sunset at 1/1/2026 the other still has the remaining reduced $6,000,000 exemption.

6) Spouses can insure against unavoidable estate tax liability more economically – Because the estate tax bill on a married couples estate can be (and usually is) easily pushed to the second death, life insurance benefits aren’t needed until then. Always call for a sales ledger for survivorship coverage on the couple in an amount covering the anticipated liability.  The  joint life expectancy dramatically reduces the cost of coverage.

Call with questions you have on your casework involving lifetime exemption planning and to discuss other concepts beyond that to reduce transfers taxes for your high-net-worth clients: tom@cpsadvancedmarkets.com or 706-354-0401.  This is just one of three, no four, other common and effective estate planning concepts often used.