Executive Benefits: Insuring a Key Employee

Key Man Insurance

Insuring a Key Employee

In a small business, there are often certain employees who have a particularly critical impact on the bottom line. Key person insurance is life or disability income insurance purchased by the business on the life of such an employee. The death benefit paid to the business can help make up for lost sales or earnings, or cover the cost of finding and training a replacement. Your financial advisor can help you determine which employees, if any, are “key” to the business, as well as evaluate how much and what kind of insurance should be purchased.

Executive Retention Plans

Section 162 plans, often called “Executive Bonus Plans,” are a simple way to reward your top people and can offer certain tax advantages.

A Supplemental Executive Retirement Plan (SERP), or Golden Handcuff Plan, is another option used to reward or retain key executives. These plans can be designed to allow the employer to enhance compensation arrangements for their key employees by agreeing to provide future supplemental retirement income in return for reaching a set of predetermined company objectives. Often life and disability income insurance policies are used to help informally fund the payments.

*This content is intended to assist in educating you about insurance generally and not to provide personal service. Guarantees are based on the claims paying ability of the issuing company. 

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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Lincoln Savings Bank and LSB Wealth Management are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using LSB Wealth Management, and may also be employees of Lincoln Savings Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Lincoln Savings Bank or LSB Wealth Management. Securities and insurance offered through LPL or its affiliates are:
Not Insured by FDIC or Any Other Government Agency
Not Bank Guaranteed Not Bank Deposits or Obligations May Lose Value
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