Is Corporate-Owned Life Insurance The Right Choice?

Insurance will always be your saving grace when it comes to protecting your business. As a business owner, are you well-versed on all of your options? One type of insurance policy many aren’t aware of is corporate-owned life insurance. While it may be a bit more unconventional, corporate-owned life insurance might be the perfect fit for you and your organization.

Defining Corporate Owned Life Insurance

The main distinction with corporate-owned life insurance is that it is a policy that is purchased by a company, rather than by a singular person, used to insure a specific high-ranking employee or group of employees, within that company. In this scenario, it is the company that purchases and owns the policy, and they are also the beneficiaries that would get the payout, while the key employees are the ones who are insured on the plan.

Situations which warrant Corporate Owned Life Insurance

One main reason a company might consider purchasing a corporate-owned life insurance policy is if the work and value provided by the covered employee or employees are so critical to the business function, that their passing would set the company back significantly, in terms of reputation, customers, and profit. To help keep the business afloat in the aftermath and to help the company find a replacement, this coverage payout can be critical.

Beyond the payout, another advantage is the company can withdraw or borrow against the corporate-owned life insurance policy’s cash value. This can even be seen as a primary benefit of this type of coverage, as no income tax is due on the distribution and this borrowing could end up earning the company additional income, even when paying the insurance premiums.

Want to find out more?

With experienced and caring agents, Schechner Lifson Corporation can make sure you get the right coverage at a price that may just be more affordable than you think. Contact us today to see how we can make sense of the world of insurance, providing you with the best coverage possible.

How Much Does A Commercial Property Policy Cost?

For business owners or those who own and lease out commercial property, ensuring that you have the proper commercial property policy is critical. Should something happen beyond your control, having a commercial property policy will make sure your business is protected. However, many business owners might be wary of investing in such insurance coverage for fear of how much a commercial property policy will cost them. As with most types of insurance policies, this type of coverage will provide you with peace of mind and a security net.

What’s Covered?

First things first, a commercial property policy will provide coverage for the building that houses a business, as well as all related equipment and inventory inside the location, regardless of whether the property is owned or leased by the business owner. These insurance policies will cover the replacement costs for the building and everything in it, should there be fire, vandalism, and other acts out of the owner’s control, subject to the exact terms of the policy.

The main areas of loss that are typically covered by commercial property policies are the building itself, both the body of the building and the associated components, such as electrical and HVAC systems, the building contents, other people’s property that might be housed within the building, and exterior signs/marquees.

What are the Costs?

As with any insurance, the exact cost of coverage will vary based on several factors. The insurance company you choose, the total amount of coverage required, the deductible elected, the building location, the type of business, and more will all have immense impacts on the final premium costs you pay on your commercial property coverage.

On average, across the United States, a commercial property policy will run business owners between $500 and $1,000 each year for small businesses, with rates extending into the range of hundreds of thousands of dollars for larger corporations. On average, the policy will be in the $700 to $800 range, with a good rule of thumb being that policies will run $1,000 to $3,000 per every million dollars of commercial property policy coverage you want. Policies also typically require a certain deductible to be paid by the policy owner in the event of a claim, usually in the $500 to $1,000 range.

Schechner Lifson Corporation can offer you help in weighing the costs and benefits of commercial property policies. Contact us today to see how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible.

How Does A Split-Dollar Life Insurance Plan Work?

Life insurance is an incredibly important investment. Ultimately, you are ensuring that you leave behind security and stability for your beneficiaries and not a financial burden. Having a run of the mill life insurance policy might not always be enough. Getting the right type of coverage and using an appropriate life insurance strategy will guarantee that what you are leaving behind is as instrumental as possible.

Split-dollar life insurance is one strategy you can use to confirm your life insurance policy avoids additional tax burdens that will undercut how much your family will receive when the policy is paid out. However, not everyone is the right fit for such coverage. So, what is split-dollar life insurance and who will benefit most?

What is split-dollar life insurance?

Split-dollar life insurance is a strategy for life insurance plans, not an insurance plan itself. The goal of this strategy, which can be utilized with survivorship or whole life insurance policies, is to split the costs and benefits.

Essentially, a split-dollar life insurance policy will enable the relevant parties to have the costs of the premiums paid into the policy and split between more than one party. Similarly, these policies will allow provisions that name multiple beneficiaries and assign specific cash values to be paid out to each of them.

Who can split-dollar life insurance benefit?

Most commonly, split-dollar life insurance is a strategy employed when companies or corporations are involved. For example, split-dollar life insurance plans may be used to split costs and benefits between employer and employee, between owners of a company, and between shareholders and corporations.

Split-dollar life insurance may be utilized between individuals as well. Premiums and benefits may be shared between family members or under the guidance of a third-party Irrevocable Life Insurance Trust (ILIT). It’s advantageous for large estates to separate their life insurance from the estate itself. An ILIT alleviates any burdensome estate taxes once the two are divided. On their terms, policyholders may still determine who the beneficiaries are and assign a trustee to oversee the ILIT.

Setting up split-dollar life insurance

A written agreement may be created that will determine the exact terms of how premium costs will be split, as well as where the cash value and death benefits will be paid. For example, an agreement between an employer and employee will include terms of what the employee needs to accomplish to continue earning the benefit, what would need to happen for the clause to be terminated, if the employee underperforms, is let go by the company, or willingly leaves.

A split-dollar life insurance plan allows you to utilize a cost-sharing plan, retain the insurance rate that was in effect when the plan was first purchased and helps to alleviate any taxes for more affluent estates.

Schechner Lifson Corporation can determine if split-dollar life insurance is for you. Contact us today to see how we can make sense of the world of insurance, providing you with the best coverage possible.

What Is An Executive Carve-Out Plan And Does My Business Need It?

As companies grow and prosper, executives who manage the evolution and operations of an organization become incredibly important assets. Companies may go the extra mile to offer supplemental executive benefits to these individuals, in exchange for the immense value and security they add to the work environment.

If your company has some of these one-of-a-kind executives, an executive carve-out plan may be just what you need. Executive carve-out plans are non-qualified plans for highly-compensated individuals, allocating compensation on top of what would already be available to them through the company’s group term life insurance.

What do we know?

When individuals are offered standard group term life insurance by their employer, up to $50,000 of those benefits are untaxed by the government. Benefits of more than $50,000 are considered imputed income and the company pays taxes on the coverage. However, if an executive carve-out plan is initiated, the executive would retain that first $50,000 of group life insurance, in which the employer would take out an individual life insurance policy for additional coverage beyond the first $50,000. This additional policy is only offered to these key individuals; that is, the coverage is carved out.

Why would a company do this?

First, the ability to avoid the additional taxes on imputed income above $50,000 of coverage helps to save on taxes and administration costs for the employer. Meanwhile, the high-value employee receives additional benefits in the form of this insurance coverage that will grow in value over time. When the employees receive this type of executive carve-out plan, they are getting a valuable piece of compensation that they might not be offered elsewhere. With this degree of recognition, these irreplaceable employees are less likely to leave, saving the employer money by retaining these instrumental individuals.

Determining whether an executive carve-out plan makes financial sense for employees at your company depends heavily on your unique circumstances.

Schechner Lifson Corporation can help organizations weigh the costs and benefits of putting an executive carve-out plan in place. Contact us today to see how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible!

4 Reasons Why Estate Planning Is Crucial

While nothing in life may be certain outside of death and taxes, both of these contingencies can be prepared for with proper estate planning. Ensuring you have a tried, tested, and true estate plan is critical if you want to leave your family and loved ones in a secure state.

So, what do you need to know when you start planning your estate?

Defining Estate Planning

One thing is certain, your estate will be passed on to your next of kin whether you plan for it or not. The process of estate planning is arranged ahead of time, ensuring that the passing of assets is done with precision, every beneficiary gets what is intended, and Uncle Sam takes a minimal cut from the estate.

Benefits of Estate Planning

There are no shortages of benefits when planning ahead and getting started on your estate strategy. Of course, no one can predict when it’s their time, so align yourself with the better to be safe than sorry mantra.

Engaging in proper estate planning will offer the following advantages:

• Reduce the tax burden for those on the receiving end of your assets. Proper usage of trusts or other estate-planning techniques can maximize the amount that gets passed on to beneficiaries – without being hit by federal or state taxes.
• Costly and time-consuming probate processes are lessened in the court system.
• Given the sensitive nature of the time and situation, families are able to grieve and focus on taking care of one another’s emotional needs.
• Protect beneficiaries from their subjective judgment, by allowing your estate-planning to include dictation of what certain assets may be used for.

Getting Started with Estate Planning

Many estate planning attorneys are out there to help you get started in this vital process. Financial advisors are also critical to the estate planning process, as they know the ins and outs of the most effective and affordable way to manage your assets.

When it comes to estate planning – Schechner Lifson Corporation can assist you. Contact us today to see how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible!

Debunking 5 Common Disability Income Insurance Myths

As with all types of insurance, disability income insurance is the type of protection you hope you never need to use. Disability income insurance is defined as the coverage that would pay periodic benefits, should you ever become injured or ill and were no longer able to work and earn a wage. So, for anyone who’s the primary income-earner in a household, disability income insurance would be critical to ensure that an unforeseen accident does not leave you and your family without a plan.

Let’s tackle five of the most common misconceptions when it comes to disability income insurance:

1. My standard workplace insurance is enough in the event of an accident

This myth perhaps arises from the understanding of worker’s compensation. Workplaces that offer worker’s compensation replace a percentage or all of an employee’s lost salary in the event of an accident at the workplace. Such plans are common in work environments with heavy duty equipment usage, where the risks of danger and severe injury are high. In these events, you can apply for worker’s compensation through your company.

There are a few reasons not to rely on this standard coverage. First, it is not a given that your workplace offers worker’s compensation. So, before assuming you’d be covered, it is imperative that you double check your coverage options. Secondly, even if you do have an employer who offers worker’s compensation, you still will want to consider a separate disability income insurance. Worker’s compensation is only offered to cover job-related injuries, and nine out of every ten long-term disability claims are for events that happen outside the workplace.

2. The likelihood of needing disability income insurance is very low

An attitude suggesting that you won’t become disabled by an injury or illness at some point in your life doesn’t add up with the statistics.

Part of the reason for this myth is that people only really consider disability events to be those that would leave them permanently disabled. Disability income insurance is also critical for minor to moderate injury events as well. An accident could leave you in severe pain for a year while undergoing physical therapy, or a simple broken bone could render you unable to complete your job until it’s healed. In these events, disability income insurance can step in to assist while your body heals. Data shows that around one in every four young Americans will encounter a disability event of one manner or another in their life.

3. I’m young and healthy, I’ll wait until I’m older to get disability income insurance

A study following long-term disability recipients found that four out of ten individuals were under the age of 50. Young workers are just as prone to accidents, and because they have had less time to save up or prepare financially, coverage is even more critical.

4. My employer offers group disability insurance, so I don’t need to think about individual disability income insurance

As with many insurance plans, it’s terrific when employers offer a baseline policy for coverage, but upon closer examination, you may discover that you require more coverage for your needs. Most group disability insurance plans will cover up to a given percentage of your salary, and you might look at that percentage and decide that it isn’t enough to sustain your family in the event of an accident – particularly if you are the only income earner in the family.

Group disability insurance will not follow you if you leave that job, so if you take time off or are in between jobs, you won’t be covered. These are all essential reasons to consider an individual disability income insurance plan.

5. What about Social Security—won’t that cover me?

Similar to group disability insurance, Social Security coverage will only replace a percentage of your lost income. The government is stringent in determining who gets a social security payout, as they are reserved for those who have the highest need for assistance. Individuals whose disability makes it impossible for them to work in their current job or any other type of occupation are eligible for these Social Security payouts.

Want to find out more?

Schechner Lifson Corporation can offer you help in addressing your disability income insurance concerns. With experienced and caring agents, we can make sure you get the right coverage, at a price that may just be more affordable than you think. Contact us today!

Looking for more information about other insurance myths? Check out our articles on Home Insurance Myths and The Red Car Myth.

Common Homeowners Endorsements To Broaden Your Coverage

Home insurance policies are typically quite broad to apply to as many customers as possible. So, it’s not uncommon for homeowners with unique needs for their home to require additional coverage. These additional policies are known as homeowners endorsements, and they can be valuable tools to ensure that you have the type of coverage you need.

There are many different types of homeowners endorsements to choose from, but some of the most common ones that you may want to consider for your home are listed below.

Home business endorsement: As people begin the transition to work out of their homes, it’s important to consider getting business insurance, as standard homeowners policies won’t cover business equipment or legal liability associated with the business and its respective assets.

Inflation guard endorsement: Inflation is an important financial reality you must consider when planning for coverage and future budgeting. Inflation guard endorsements automatically increase your insurance cost by a relevant percentage each year, keeping up with inflation trends.

Earthquake endorsement: Based on your location in the United States, individuals living in high-risk areas have the option to add on a homeowners insurance endorsement. In the event of an earthquake, this feature will cover the costs of repairing the home and other damaged structures.

Sewer backup endorsement: Having a sewer backup is not only discomforting, but it can be dangerous to a resident’s health and quite costly. Adding a homeowners endorsement to cover sewer backups and its associated water damage is a relatively inexpensive add-on.

Watercraft endorsement: Homeowners endorsements can even expand to cover property purchased resides at a household. For example, a watercraft endorsement will add coverage for a boat you own and also protect it against damages during boating and while docked, even if it’s docked at another location. These policies can include motorcycles and boats, so contacting your home insurance provider will highlight precisely what endorsements you can add.

These five homeowners insurance endorsements are just a sample of the many policies available with your homeowners insurance policy. If you’re interested in any of these specific endorsements, or if you want to explore additional endorsements, contact us today. Schechner Lifson is an independent insurance agency with experienced and caring agents who can make sure you get the right coverage at a price that may just be more affordable than you think.