View
39
Download
0
Category
Tags:
Preview:
DESCRIPTION
BUSINESS CONTINUATION STRATEGIES using life insurance. An introduction to small-business owners Key Person Life Insurance. PPT-261 1/2014. Agenda. Life insurance death benefit protection Why business continuation planning? Key person life insurance. Before we begin:. - PowerPoint PPT Presentation
Citation preview
Allianz Life Insurance Company of North America
For financial professional use only – not for public distribution.
An introduction to small-business ownersKey Person Life Insurance
BUSINESS CONTINUATION STRATEGIES using life insurance
PPT-261 1/2014
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
1. Life insurance death benefit protection2. Why business continuation planning?3. Key person life insurance
2
Agenda
This presentation is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives and employees do not give legal or tax advice. Encourage your clients to consult their tax advisor or attorney.
Before we begin:
2
Why business continuation planning?
3
Attributed to Andrew Carnegie
“Take away all my factories and my equipment.
Take away my wealth.
But leave me with my key people and in a short time I’ll have it all back again.” Andrew Carnegie
4
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
Why business continuation planning?
Try answering the following questions:
What will happen to your business when you retire?Do you have a business successor lined up and ready to take over?Will your entire business or a share of your business need to be sold?Do you already have buyer and what is the price?What if you died today?What would be the consequences to your business partners, employees, customers, debtors, creditors, and most importantly, your family and beneficiaries?
5
The LOSS OF A VITAL EMPLOYEE
can have a much more
CATASTROPHIC IMPACT on the
survival of a small company than a
large one.1
1”Small World, Trends in the U.S. Small Business Market,” LIMRA, 2013.
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
6
Potential pitfalls survivors may face after the death of a business owner
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
How can life insurance fit into business succession planning?
A death benefit provided by life insurance can be a vital part of your business succession planning and employee retention.
Fixed indexed universal life (FIUL) insurance can also help while providing potential tax advantages.
7
Some common uses of life insurance in business succession planning
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
The death benefit is the main reason for purchasing life insurance
It passes income-tax-free to the beneficiaries and can be used for: Income replacement for primary
wage earners Business succession Mortgage and other debts Estate tax coverage
8
Source: 1“Small World: Trends in the U.S. Small Business Market, LIMRA, 2013.
Small businesses REQUIRE MULTIPLE
TYPES OF FINANCIAL PROTECTION including:
Personal coverage for the business owner
Financial safeguards for the business
Insurance and retirement benefits for
the employees1
For financial professional use only – not for use with the public.
HOW FIUL WORKS
9
Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and your clients should consult a tax professional.
POLICYHOLDER
Pays POLICYPREMIUMS
POLICY FEES & CHARGES Fees & charges used to fund
DEATH BENEFIT TO BENEFICIARIESAND OTHER VARIOUS EXPENSES
MAXIMUM PREMIUM
Minimum premium
Any available
CASH VALUE
Has the potential to
GROW
as more premium is p
aid
Cash value may be accessed via POLICY LOANS
AND WITHDRAWALS1
3
Key person life insurance
10
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
Key person life insurance
Can be a straight forward way to help ensure business continuityA death benefit can help protect a small-business owner from the loss of a key employeeDisability of a key employee - Fixed index universal life insurance (FIUL) cash value accumulation potential could be accessed through policy loans and withdrawals¹
For EMPLOYER OWNED LIFE INSURANCE (EOLI), the
OWNER AND INSURED MUST SIGN aNOTICE AND
CONSENT FORM. Work with your attorney to
ensure you have all required documents.
11
¹Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and you should consult your tax professional.Keep in mind most life insurance policies require health and in some cases, financial underwriting.
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
How does key person life insurance work?
12
This hypothetical example is provided for illustrative purposes only. ¹Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and you should consult your tax professional.
PaysDEATH
BENEFIT ORACCESS TO
ANY AVAILABLE CASH VALUE¹
Key person = Insured
BUSINESS =POLICY OWNER & BENEFICIARY
INSURANCE COMPANY
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
Key person life insuranceWhat happens if a key employee leaves or retires? Business can continue to own the policy, pay the insurance
premium, and receive the death benefit upon the death of your former key employee.
If your key employee is retiring, you can offer the policy as a bonus, at its present value. Retiring employee would become the owner of the policy. Such compensation would be considered taxable income for the retiring
employee for income tax purposes. Business can surrender the policy to the life insurance company
and obtain the available cash surrender value.¹
13
¹Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and you should consult your tax professional.
Summary 1. Life insurance death benefit protection2. Why business continuation planning?3. Key person life insurance4. Next step
14
Work with your team of professionals to see if fixed index universal life insurance can help with your business-planning strategies.
The next step
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.
The Employee Retirement Income Security Act (ERISA) may apply. Be sure to consult your tax advisor or attorney regarding your own situation.
Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.950.1962 www.allianzlife.comProduct and feature availability may vary by state.
DisclosuresAllianz Life Insurance Company of North America
16
DISCLOSURE OPTIONS (Copy + Paste into disclosure text box)Internal: For internal use only – not for public distribution.Client facing: Delete text.Fixed and Life products: For financial professional use only – not for public distribution.Variable products: For broker dealer use only – not for public distribution.
OUR MISSION:Allianz Life Insurance Company of North America is the trusted authority in insured retirement solutions for consumers working with a financial professional.
17
Recommended