How to Strategically Use Split Dollar Arrangements

Executive Benefits

Strategically Retaining Talent Using Executive Benefits

As the economy changes, attracting and retaining top talent has emerged as a high priority for businesses of all sizes and industries. Life insurance can serve as a simple, yet powerful, incentive for top performers.

Employer-Paid Individual Term Life Insurance

Finding a way to provide top performers with a valuable benefit — one that won’t be too hard on the bottom line and is easy to administer — could be an ideal solution to reward the contributions they bring to the table. Utilizing a simplified-issue term product as a fringe benefit, employers can offer an individually owned, fully portable employer-paid 10-year guaranteed level term to their full-time, white-collar employees. In addition, this non-voluntary benefit features tax-deductible premiums, making it just as advantageous for employers as it is for their employees.

Executive Bonus Plans

When it comes to retaining top talent, employers need to get creative with benefit offerings. Through a 162 executive bonus plan, companies can offer life and/or disability income insurance to their key employees using tax-deductible dollars. Here’s how it works:

  • Your business pays a tax-deductible bonus to fund premiums for a life insurance policy owned personally by the employee.
  • The employee designates a beneficiary for the death benefit and may have access to policy cash values, if any, on a tax-favored basis to address personal needs, such as supplemental retirement income.
  • The employee pays income tax on the bonus received.
  • At death, the employee’s beneficiary receives the death benefit proceeds, generally income tax-free.

Connect with a CBIZ Professional

Generally, executives have higher incomes and need greater protection than what is offered by an employer-sponsored group benefit program. By providing them with life insurance benefits, you can deliver the level of protection that better suits their needs and positively impact recruitment and retention efforts.

Let CBIZ Life Insurance Solutions help provide you and your key executives with the protection and security needed to continue a lasting working relationship.