Give Your Clients Business and Personal Life Insurance – In One Policy

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In our previous Windsor Blog we introduced LifeComp, a suite of employer-sponsored plans that share a common funding vehicle (life insurance) and deliver several powerful advantages including unique plan design and presentation, full documentation, and comprehensive plan administration.

LifeComp will help you change the game when it comes to conventional thinking about term insurance solving isolated business planning issues. Through a more comprehensive approach, you can address needs such as buy-sell funding and key-person risk with flexible solutions that sync up with the desire for supplemental retirement, death benefit, and longevity planning. And when that happens, permanent sales happen!

The LifeComp suite features four non-qualified benefit plans that offer varying degrees of employer ownership and control. The plans will help businesses:

  • recruit, retain and reward top talent
  • build supplemental retirement income or death benefits for business owners and/or key executives
  • choose from attractive options for balance sheet reporting
  • streamline plan administration and reporting

 

Golden key and puzzle

So that you can drill deeper at your convenience, we’ve developed three educational videos of 30 minutes each on LifeComp and the business owner strategies it supports. Each session is moderated by Windsor’s Marc Schwartz JD, CLU and presentations are done by Doris Zimmer CLU, ChFC, a key player on Lincoln’s Business Insurance Solutions team. This team supports Lincoln’s wholesalers and BGAs with small business owner planning strategies incorporating life insurance. Doris also works closely with Lincoln’s LifeComp team as well as their Executive MultiLife underwriting program.

The first presentation “Leveraging the Business Dollar” provides an introduction to the opportunities made available by the Tax Cuts and Jobs Act (TCJA), and explains how using business dollars improves the effectiveness of life insurance in the business planning environment. It then moves into specific sales strategies that leverage permanent life insurance to solve key person risk. This includes taking advantage of the cost efficiency of sharing life insurance death benefits with split dollar strategies.

The second presentation “Lincoln LifeComp” is a comprehensive overview of the platform and the four non-qualified plan designs for business owners and their key executives. All are funded with life insurance and can provide:

  • retained assets on the business balance sheet
  • the advantages of life insurance for business owners and/or their key employees
  • key-employee replacement coverage
  • death benefit for the employee’s chosen beneficiary
  • supplemental retirement income to employees
  • complete control over plan choices and options

The final presentation “Lincoln LifeComp FlexKey Cross Purchase Arrangement” focuses on a unique design that positions permanent life insurance, not term, to provide buy-sell planning and personal planning in one solution. The FlexKey program designates each individual business owner as the owner of the contract on his or her life. A portion of the death benefit, sufficient to provide cash for a buyout in accordance with a documented buy-sell agreement, is endorsed to each of the remaining business owners.  What adds tremendous value is the potential to use the policy for both personal and business purposes, and ultimately to reward owners with full control of the death benefit and cash values in their own policies.

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With a Lincoln LifeComp FlexKey plan, business owners can have a cost-effective buy-sell solution and avoid some of the challenges of other planning options because:

  • partners pay mortality risk on their own life, not their co-owners (as in conventional plans)
  • only one policy is needed per owner, eliminating the need for multiple policies on each individual life
  • FlexKey provides a solution that can help owners meet personal and business objectives with one policy
  • there is no need for policy transfer after the business agreement is terminated. Each owner already owns their own policy.

And with the LifeComp platform, you and your clients will enjoy simple yet effective plan administration. Clients and their advisors will appreciate the easy plan administration and reporting that the LifeComp tracking system delivers. For a modest annual cost, they’ll receive:

  • Fill-in the blank documents that will cut down on the cost of customization
  • Accounting reports, listing exact debits and credits needed, depending on plan design
  • Year-end reports, annual re-evaluations, and re-proposals that track the plan’s progress with the original plan objectives
  • In addition, post-retirement services are available to retired executives

Want to learn more?  Here are the videos and additional resources you’re looking for:

Videos on Demand – [approximately 30 minutes each]

  • Leveraging the Business Dollar – Life insurance strategies for a new tax environment in 2018 and beyond
  • Lincoln LifeComp – non-qualified plan designs for business owners and their key executives
  • Lincoln LifeComp FlexKey – Cross-Purchase Arrangement – Buy-sell funding strategy that provides business owners with control, flexibility and options

Additional Resources

 

 

 

 

 

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