Controlled Executive Bonus With LTC Benefits

A Controlled Executive Bonus Plan, also known as a Restrictive Executive Bonus, or Section 162 Plan, is an agreement between an employer and its key employee(s) to provide a death benefit, supplemental income, and now includes long-term care benefits.

The employee applies for and owns the life insurance policy, with the right to designate the beneficiary(ies) of the policy.  The company then pays the “bonus” premium directly to the insurance company.

The employee’s right to receive the cash value of the policy through loans, withdrawals or surrender is restricted during a time period based on age, years of service or other conditions agreed upon by the company and the employee.

If the employee terminates employment during this restricted period, the company must agree for the employee to have access to policy cash values.  The employer, at that time, may require repayment of some or all of its “bonus” premiums from the policy’s cash value in exchange for its agreement.

*Subject to agreement

A Controlled Executive Bonus Plan has two advantages to the employer:

  • Pay key employee(s) a bonus in the form of a life insurance premium
  • Can take a current deduction for the bonus
Benefits of a Controlled Executive Bonus Plan

For the employer:

  • Can select which key employees can participate
  • No mandatory eligibility and participation rules
  • No IRS restrictions or approval
  • No government forms or reports, minimal administration
  • “Bonus” premiums are tax-deductible
  • Recruit, reward and retain key employees using “golden handcuffs”

For the employees:

  • Income-tax free benefits paid to surviving family at death
  • Permanent life insurance protection
  • Long-term care benefits available
  • Tax-deferred growth of policy cash values
  • Income-tax free death benefits
  • Although the employee must report the life insurance premiums paid each year as taxable compensation, impact of this can be minimized by the employer providing a cash bonus to the employee sufficient enough to cover both the premiums and income taxes due
  • Unrestricted ownership of policy and its values after the restricted period ends

The endorsement is executed by the employer and employee and filed with the insurance company.  For a specified period of time agreed to by the employer and the employee, the endorsement restricts some of the employee’s ownership rights in the policy.

During the restricted period, the endorsement restricts the right of the employee to surrender the policy, assign the policy as collateral, change ownership or make a policy loan, unless the employer also agrees.  The restrictive endorsement is typically designed to expire at a defined point, usually between 5-15 years.

For more information about the long-term care benefits included in a Controlled Executive Bonus Plan, please contact your LTCi Sales & Marketing Manager.

Long-Term Care – It’s Just A Conversation Away

Long-Term Care (LTC) is often perceived as a difficult subject to discuss, but the ultimate goal – financial security – is the same as with any other type of insurance or investment that you currently offer your clients.

Don’t let the topic of long-term care intimidate you out of a potential sale.

The next time you sit down with you clients, avoid leading with product facts and statistics.

Try asking the following questions to start the conversation:
  • Do you have personal experience with a family member or friend that needed long-term care?
  • How and where was the care provided?
  • How was your/their impacted physically and emotionally?
  • How was the cost of care handled?
After discussing these details, ask your clients how they would handle that type of situation:
  • Have you thought about the impact to your assets and family if you were to someday need long-term care?
  • Where would you want to receive care?
  • Could you financially absorb the cost of care?
  • What level of involvement would your family have in your care?

The goal is to help your clients see LTC Insurance as the solution for a situation that could significantly impact their loved ones and their financial future.

They will begin to see the valuable benefits of LTC Insurance, which creates a natural segue into a discussion on product features and details.  Suddenly, the topic you were hesitant to discuss has transitioned into an LTC Insurance sale.

We’re here to help you design a plan that is both affordable and the best solution for your clients’ needs – contact your  LTCI Sales Rep for guidance.

Tell A Story – Sell LTC

Getting your clients to talk about Long-Term Care (LTC) can be very challenging.  Many clients don’t believe that it will happen to them.  They are under the impression they will not be among the 70% of Americans who need LTC at some point in their life.

So how do you get people interested and talking?  The answer is simple, tell a story.

Here are some tips on storytelling to get people interested in LTC:
  • Talk about your own experiences – this adds personal and emotional value
  • Use stories from others – discuss their challenges and how they overcame them
  • Express your emotions – explain how the situation made you feel, or how others felt
  • Make sure it is relevant to your audience – if a potential client doesn’t have children, do not talk about how difficult an LTC situation is on the kids
  • Don’t try too hard – people know when you are lying just to get a sale
  • Keep it positive – don’t scare prospective clients with horror stories, educate them on the benefits of LTC
  • Short and sweet is key – keep your clients interested by only focusing on important details
  • Encourage discussion – ask questions and open up the dialogue to get potential clients involved and let them share their stories

The main goal of storytelling is to get prospective clients to visualize themselves needing LTC at some point, how great they will be taken care of, and how costs will be covered.

For more information please contact your LTC Specialist today!

How To Breakthrough The Couple Rejection Objection

As you’ve all experienced, the majority of your clients who are couples come together as a packaged deal.  So what happens when a couple applies for a Long-Term Care Insurance (LTCi) policy and only one is approved?

In most cases, the spouse who received the green light may no longer want a policy with a carrier who rejected coverage for their significant other.  And even worse, they may decide that they no longer need coverage at all.

The reality is – if one spouse is declined, it is even more crucial that the insurable spouse has a plan in place.

Convincing the insurable spouse to proceed with the plan

Client Objection:  “My spouse was declined so I do not want to take my policy.”

In this case, it is probable that the healthier partner will attempt to care for the other – with whatever financial, physical, emotional and mental demands that are required.

Your Reply:  “Caring for a loved one could either be met with minimum effort or it may be very strenuous.  And while personally caring for your significant other, you may have do to dip into your savings, leaving little funding left for your own care.”

You Ask:  “Would you be ready to go it alone and take care of all those new tasks that arise in a situation like that?”

Once you’ve overcome the objections, we will help you make certain your clients have the right LTCi plan in place to meet their needs.

Contact your LTCi Sales Rep for more information.

5 Steps To Building Your LTCi Business Plan

Developing a plan for an entire year can be a daunting task.  With so many days ahead of you, it’s easy to get sidetracked and let a few months of inactivity slip and sabotage your success.  It’s time to take a more disciplined approach.

Stay Motivated All Year

Be sure to write down your business plan and place it where you’ll see it each day.  Also set up a repeating calendar entry each week to review the plan and the work you’ve done to achieve it.

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” ― Abraham Lincoln

Start small and focus on building a plan with measurable and achievable goals.

Set Goals
  • Be Realistic – It may sound great if your goal is to increase your Long-Term Care (LTC) Insurance business, but you might be setting yourself up for failure.  Instead commit to making LTC Insurance more fully integrated into your business.
  • Make Them Measurable – Numbers don’t lie, so use them to make yourself accountable.  Pinpoint a certain number of applications you’d like to write, client meetings you’d like to host, or referrals you’d like to gain.
Create A Plan
  • Develop A Strategy – Now that your goals are in place, how will you reach them?  Create actionable items to focus on throughout the year.  Maybe it’s simply making LTC Insurance a part of every financial planning discussion you have or it’s committing to hosting quarterly education seminars in your community.
  • Target Completion Dates – Having monthly or quarterly milestones are a great way to track success, and provides you with ample time to plan ahead.
Take Action
  • Get Motivated – Your business plan may seem foolproof, but won’t work if you don’t put it into action.  Begin each day with a task to help you meet a specific goal.  You’ll build momentum to keep you focused and productive.
  • Commit To Your Plan – You’ve positioned yourself for success and have taken the time to establish specific goals, strategies, and deadlines.  Stick to your plan and give it a chance to work
Track Results
  • Self-Evaluate – Are you ahead of your goals or are you falling behind?  Regularly reviewing your progress will provide you with direction on how to focus going forward.
  • Make Adjustments – You may find that one approach works, and another does not.  Being flexible will allow you to change strategies to achieve overall success.

We’re here to help – reach out to our Long-Term Care Associate for assistance with your planning.