Group carve-out sales: the impact of time value of money on high and low premium approaches

Article Abstract:

IRC section 162 bonus plans or split dollar plans provide alternatives to supplemental group term insurance for employer and employee. However, their advantages suit different company needs so a cost analysis is essential. Section 162 plans are cost neutral in comparison to term insurance while providing employees with higher benefits and are appropriate for cash constrained companies or those needing internal investment in expansion or operations. Split dollar plans have higher premiums but initial costs can be recovered and so they are appropriate for companies with surplus cash.

Accounting and auditing, Employee benefits

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Yes, invest the difference - in upscale term conversions

Article Abstract:

A group carve-out or upscale term conversion may provide the necessary term insurance planning for professionals in a practice that includes older and younger persons. One group of 11 radiologists changed from a two times salary term insurance to a collateral assignment split dollar program because their ages ranged from 42 to 60. The advantages include that they will receive their cumulative contributions at retirement and can invest the difference between the two plans in their business.

Management, Insurance policies

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