Do you have clients who own their own businesses? The next time you talk to them about retirement planning, ask if they're looking for new or different funding options.

We have insurance-backed options that can provide even more benefits than a traditional 401(k). Non-qualified 401(k) look-alike plans funded with universal life are a great example. They work for the business owners themselves, or as part of a compensation package for execs and top performers. If the plan is for an employee, your client has the option to match the employee's contributions, mirroring the structure of a traditional 401(k).

How It Works

Every year, as part of a compensation package, your client (or their employee) defers a portion of their income before the period in which they'll earn that income. The business owner may limit this amount, as well as contribute a matching amount up to 50% of the employee's contribution. The business then takes out a policy on your client (or their employee). The business pays the policy's premiums, so they aren't treated as income for your client (or their employee). The business can't deduct those payments, however, which is one thing to consider. When your client (or their employee) retires, the business uses the policy's cash value to pay the retirement benefit to your client. If your client passes away before retirement, the death benefit goes to his or her survivors. The payments to your employee are deductible for the company, and taxed as regular income for your client (or their employee), as would the death benefit be if his/her survivors were to receive it.

Our Carriers

Need Help?

We can help you answer your client's questions about a range of advanced business insurance concepts, from 401(k) look-alike plans to executive benefits, employee stock option plans, and other life-insurance-backed planning options.

  • Call us at 1-800-823-4852 and ask to speak to a brokerage director.
  • Click here to email our brokerage sales support team.
  • Click here to email our benefits team.

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