Do you have one or more employees who are critical to the success of your business? If so, you have probably asked yourself these questions more than once:
- What would it cost my business if I lost them?
- What am I doing to keep my best employees?
- Would providing additional incentives not available to other employees be of interest to me and to my key employees?
Showing your key employees how much you value them can help keep them closer to your business.
Consider helping your key employees address their personal needs using business dollars. Meet Sean at New American Company as an example to see how this might work.
Sean is considered a valuable contributor to the success of New American Company. In fact, Sean is a key employee of New American Company. In order to further tie Sean to the company, New American Company wants to provide benefits over and above the group and retirement plans available to all full-time employees.
Sean has a family and feels he needs more protection for his loved ones. Although he appreciates his group life benefit, he feels it is insufficient for his family if he should die prematurely as he is the only one working.
New American Company can help Sean reach his goals while serving their own interests at the same time. Sean can apply for and own an individual life insurance policy on his life. He can name his family as beneficiaries. New American Company can furnish the funds to pay the premium. Because this is considered compensation, Sean will have to pay income tax on the premiums.* Even so, Sean receives a meaningful benefit at a significant discount, and, in many situations, New American Company could deduct the premium as a business expense. New American Company could take it one step further by not only paying the premium but the income tax due as a result of the bonus. Sean would then have no out-of-pocket expense for the life insurance.
If New American Company had more than one key employee, it could pick and choose whom to reward and even provide different benefit levels.
*Western & Southern Life does not give tax advice. Please contact your tax advisor for information that applies to your situation.