Frequently Asked Questions

It is simpler to recruit great talent when your benefits package is stronger. Offer non-qualified plans including deferred compensation, split dollar plans, bonus plans, more time off, employee stock purchase programs, or cash bonuses. These programs can offer extra benefits and bonuses if you have a select employee whose salary and contributions to qualified retirement plans are restricted by law. The outcome? Employees will be more loyal and engaged.

Three ways that are commonly used. The easiest approach, the multiple of income approach is the simplest and is frequently used with a multiple of five or seven. The cost of replacement method is another approach. This approach takes pay into account as well as costs associated with hiring, training, and recruiting. The process of contribution to earnings is a little more difficult. Your legal or tax counsel can help you choose which approach is best for your company.

No. Establishing an Executive Bonus program is not subject to any formal requirements. The life insurance coverage will be purchased and owned by the employee. The insurance company will receive the premium payment from your company. The premium is recorded on the employee’s W-2 as other compensation and is liable to FICA and FUTA because it is a “non-cash” fringe benefit for tax withholding purposes.

If your life insurance is permanent insurance that has accumulated cash value, you may be able to withdraw or take a loan against the cash value to provide cash towards your purchase of their interest.

A key component to protecting the value of your company is how you intend to transfer ownership. Create a formal buy-sell agreement, so that if you or another owner decides to exit the company for any reason, the transition will be smooth. Fund the agreement. Essentially, you want to have a strategy in place for how and when funds will be used in this transaction to prevent negative financial consequences. Life insurance and disability buy-out insurance, along with other funding options like loans, sinking funds, or cash, can all help with this kind of finance.

Disability insurance safeguards your income from unforeseen events in life, so you will not have to use up your savings or retirement funds.

In the event that you suffer from an illness or injury for an extended period, individual disability income insurance may be able to replace some of your income.

A well-thought-out plan can provide peace of mind by ensuring that your family or heirs can continue to live comfortably both before and after a major illness or death. Wills and trusts may be included in your plan. Life insurance can provide the necessary funds so that your beneficiaries or heirs may cover final expenses, settle debts, and make up for any lost income. There are several life insurance options available to suit your needs and financial situation. Certain insurance policies also offer benefits during your lifetime, including the ability to access the cash value or accelerate the death benefit, if diagnosed with a chronic or terminal illness.

A good plan can ensure that your assets—both personal and business—meet your lifetime goals and are transferred according to your desires. A properly drafted estate plan could shield your heirs from probate proceedings and possibly reduce estate taxes.

To make sure your legacy goals are achieved, you can work with your estate planning attorney to determine which “best practices” are most pertinent to you.

If one child is to inherit the majority of the company’s assets while another child receives a smaller portion of assets. The aims of succession planning and estate equalization may be successfully attained with the help of life insurance. In other words, the child who is involved in the company inherits the company shares after your passing, while the child who is not a part of the business inherits an equivalent amount from a mix of life insurance death benefit and any other non-business assets. By treating your heirs fairly, you are contributing to the success of the family business and, more  more significantly, maintain the peace and harmony within your family.

An irrevocable trust should be taken into account if estate taxes and estate inclusion are a concern. An irrevocable life insurance trust (ILIT) is a type of of an irrevocable trust that is used to help prevent life insurance death proceeds from being taxed in your estate. ILITs typically own life insurance. When you pass away, the trustee of your ILIT may use the life insurance death benefit to buy the assets from your estate or make a loan to it in order to give your estate the cash flow it needs to pay any owed estate taxes.

Successful people have devoted a lot of time and effort to accumulating their wealth, and they want to preserve as much of it for themselves and their families. A U.S. life insurance policy can provide survivor income, it can be a part of the estate and business planning process, can add diversification to your portfolio, supplemental retirement income, and assist with tax planning.

In general, yes, if certain criteria are met, such as whether the country of residence is permitted, whether there are any ties/ connections to the United States, issue age(s), the method of payment/funding of the policy, solicitation, and medical examination requirements.

Regardless of whether you are a foreign citizen who is currently living or plans to live in the U.S., a foreign citizen who owns a business or other assets that are located in the U.S., and/or you and your spouse intend to transfer U.S. property to each other and one or both of you are not U.S. citizens, your U.S. based assets may be subject to a federal estate tax up to 40% with only a small exemption available. 

These unique situations can be recognized and prepared for in several ways. Life insurance may provide one piece to the puzzle. You might be able to use life insurance as part of your estate plan to give your heirs a tax-free benefit so they can pay U.S. estate taxes without having to liquidate their assets. After the tax obligations are satisfied, the policy may also provide some wealth transfer to the beneficiary.

A permanent life insurance policy may offer: 

• Income and estate tax-free death benefit
• Tax-deferred cash value
• Tax advantage distributions
• Heirs can use liquidity to protect assets

Certain features of a life insurance policy might help foreign nationals with their unique estate and tax planning needs. For instance, life insurance proceeds are not regarded as tangible U.S.-based assets, therefore, are not subject to U.S. estate taxes. Also, the proceeds are generally income tax-free.

Beyond the benefits of estate and tax planning, there are further advantages:

• The proceeds are paid in U.S dollars.
• The U.S life insurance industry is highly regulated.
• Compared to other foreign market insurance policies, U.S. life insurance pricing is competitive and features improved product design.
• Ability to choose your beneficiaries if concerned about forced heirship.
• Economic security and wealth diversification that may not be possible in a foreign market.