What is Corporate Owned Life Insurance?
If you are a business owner, you may be interested to learn more about corporate owned life insurance and the instances in which such types of policies can be useful. Perhaps the most common use of a corporate owned life insurance plan is to pay for deferred compensation plans, or rather the benefits and policies of the executives who run your business.
The reasons businesses choose the route of purchasing life insurance policies to fund these plans is because the policies can be designed in such a way that any withdrawals and increases in the policy’s equity will not be subject to taxation, if one of the business’ executives dies the company will receive the benefits, not to mention other ways in which the policy can be used to the benefit of the business when it comes to taxes. You will want to consult with your accountant to get the details on how a corporate policy is specific to your individual business.
In addition to these common uses, corporate owned life insurance is also commonly used as a way to efficiently fund a buy-sell agreement. If a group of people own a business but only a portion of those people own stocks in the company, they may decide to buy enough corporate owned life insurance to cover the stock owners. This way, any cash value that the insurance policies build will likely be enough to cover the cost of the compensation plans for the rest of the business owners or executives, and other money from the business can be used to fund a buy-sell agreement. In some instances, companies will organize their compensation plans so that managers and other executives receive benefits whenever they reach specific company goals. This means that the benefits become a form of motivation in addition to the coverage that an executive may want and need.
Creating a plan that will work for you and your company with corporate owned life insurance takes collaboration with an industry expert and a certified public accountant. TermLife-Insurance.com has those experts on staff. We have licensed agents and case managers in house specifically for these types of corporate owned life insurance plans. Our agents can also show you how to get the most out of your corprate life insurance policy. If you own a company that is interested in putting corporate owned life insurance to work, contact one of our licensed insurance agent to learn more about these types of insurance plans. Call 855 743 0199.