Benefit Packages for
Business
Benefits can come in many different shapes and sizes. One that's popular today is an
"executive" benefit program. Many business owners like this type of
program because they can pick and choose who is eligible. They don't have to provide the
same coverage for all employees. Business owners can cover only themselves if they wish.
You can also fund executive benefit programs in many different ways. Mutual funds,
annuities, CDs, and life and disability income insurance can all play a part in executive
benefits.
Executive benefits are easily tailored to meet the needs of
business owners like you. Let's look at some of the more popular types of programs
available:
Pre-Retirement Death Benefit
This is typically the most basic fringe benefit an employer provides. If a key person dies before reaching retirement age, a cash payment is made to his or her beneficiary.
The cash payment may be used to provide support for the employee's family or for payment of outstanding debts. In some cases, cash also is needed to pay estate taxes. Death benefits also may fund college educations for the employee's children or provide replacement income for the spouse.
Post-Retirement Death Benefit
Group term life insurance coverage generally stops at retirement. Sometimes the term insurance can be converted to permanent coverage, but the cost associated with older ages is high.
Many times an employee has a need for insurance protection after retirement. Post-retirement death benefits may be used to meet estate tax obligations, provide cash for beneficiaries, or finance bequests and charitable contributions.
Post-Retirement Income Benefit
Will you and your key employees have adequate incomes during your retirement years? Tax law changes have limited the benefits allowed to highly compensated employees on a tax-deductible basis. Your business can fund a retirement benefit which supplements existing retirement plans, such as Social Security and pension benefits.
These retirement benefits also can be designed to help retain and motivate your key people. In addition, they can provide a survivor benefit if the employee dies before receiving all payments.
Income Deferral
If you have a 401(k) plan, you're already aware that the amount you can defer is restricted by law. Many highly paid employees want to defer more income than allowed under a 401(k) plan.
In a deferred compensation program, you and your key employees can voluntarily defer current income. The deferred funds are invested and paid out, with interest, at some future date. This benefit allows employees to accumulate assets for retirement on a tax-deferred basis, using pre-tax dollars.
Disability Benefit
Statistically, executives have a significant risk of disability prior to retirement. The economic cost of disability to the executive's family may be substantially higher than the cost of death due to extensive medical bills.
You can help your employees protect their most valuable asset --- their ability to earn an income.
Plans To Meet Your Needs
Executive benefit programs are flexible. Any one or all five of the benefits
mentioned above can be provided through several different programs. These programs have
advantages for the business, as well as the select employee's. They can be tailored to
meet your needs.
