Key person insurance can be an important part of the way your business hires and retains top talent—one of the biggest challenges for many small business owners. Matching the benefits that larger companies offer can be difficult, so you should prioritize what your business is able to provide and what your employees will value most. Employee life insurance is a benefit that many professionals consider important.
There are a variety of options for group life insurance, and your employees can be given the ability to opt into supplemental life insurance protection via convenient payroll deductions, which New York Life will set up.1 You can also add disability protection, which many employees will value.
In addition, New York Life offers small business solutions to help you attract and retain the kind of employees who will help your business thrive. Key person life insurance, also called key employee life insurance, is one way that business owners can reward and retain their best talent.
You will want to speak with an agent who specializes in helping small businesses. Your agent will be able to outline several strategies that could help you attract, retain and reward key employees. In order to identify the right strategy for you, he or she will ask you about your specific objectives.
The first matter to address is:
There are several plans that many businessowners find valuable. The arrangements can be funded with whole life or term insurance.
Stay bonus plan
The employer promises a specific bonus to an employee who stays for an agreed-upon period of time.
162 Executive bonus plan
The employer gives the employee a yearly bonus that is used to purchase and pay premiums on a whole life insurance policy that is owned by the employee.
Supplemental executive retirement plan
The employer promises an additional retirement benefit to a key employee, usually in return for not leaving before a certain date. It can be financed by purchasing a whole life policy (which accumulates cash value).
Note, neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
1 This program is not intended to be subject to the Employee Retirement Income Security Act of 1974 (ERISA). The employer does not contribute to or endorse the program. Employee participation is completely voluntary.
2 Accessing cash value will reduce death benefit and available cash surrender value.
3 New York Life has received the highest financial strength ratings currently awarded to any U.S.life insurer by Standard & Poor’s (AA+), A.M. Best (A++), Moody's Investors Service (Aaa), and Fitch (AAA). Source: Individual Third-Party Ratings Reports as of 10/15/20.