Are you a business owner looking for a benefit plan that will help both you and your most valued key employee(s)?

With the cost of long-term care rising significantly every year, we all look for alternative ways to provide funding for that possibility. Since I have talked about the need for life insurance in the past, why not combine the  life insurance coverage AND long-term care coverage into a single policy? Yes, most carriers have added “Living Benefits” to their life insurance policies. Each has different rules for accessing the cash value/face value depending on what type of care you need.

Consider this option of a combined policy:

A 12-pay whole life policy designed to provide long term care benefits. It also offers life insurance protection and cash value accumulation. (12-pay means paying premiums for only 12 years.) And with a streamlined underwriting process, it may be easier to purchase than fully underwritten life insurance products.

Here is how the plan will work:

• Your business will pay the premiums for the policies on each employee selected to participate.
• The employees will own the policies on their lives and enjoy all rights and benefits.
• The premium paid for each policy will be considered bonus compensation to the employee insured.
• The business will receive an income tax deduction for the full amount of the premium paid, subject to reasonable compensation limits.
• The cost to the employee will be limited to the annual income tax due on the bonus amount each year.
• The plan will require minimal administration and record keeping.

The benefits the policy provides to each employee include:

• A pool of tax-free long-term care benefits, if needed.
• A tax-free death benefit for the employee’s spouse or family if he or she never needs care.
• A policy surrender value that accumulates tax deferred.
• The potential to receive policy dividends which can increase all  these benefits over time.

This is a great way to increase your key employee retention!