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Death Benefit Only Plans - Life Policies for Businesses. IHP Advisors Having the right plan in place can help recruit key employees, keep key employees, and plan for retirement. An employer uses a group carve- out plan to remove highly compensated employees from the company's group term life insurance plan and obtains individual life insurance policies. A DBO plan is an employee benefit plan that provides a death benefit to the employee's family or a named beneficiary at the employee's death. Because DBO plans are based on individual policies, they are portable, which makes them attractive to the highly compensated employees who are selected to participate. The insured employee may not have any direct rights over the policy. Upon the employee's death, the plan beneficiaries receive the death benefit under the DBO plan. Premiums may not be taxable as income to the employee/insured if the employee has no interest in the policy, and the employer retains control over naming policy beneficiaries. For life insurance contracts entered into after August 17, 2006, the death benefit on an employer-owned life insurance policy is not taxable to the employee if certain specific requirements are met before the issuance of the policy. One exception is that the insured is an employee of the policyowner-employer at any time in the 12 month before death, or that the employee is either a more than 10% owner of the business, or highly compensated, or in the top 35% of all employees ranked by pay. The death benefit must be paid to qualifying members of the insured's family or a named beneficiary, or the proceeds must be used by the employer to buy the insured's interest in the business from qualifying family members of the employee. Contact Us At: https://ihpadvisors.info