BUSINESS LIFE INSURANCE The success of a business, whether it's a tiny enterprise run out of your home or a large corporation, is to certain extent dependent on hard work and ingenuity. However, no matter how industrious you are one catastrophe can wipe out all your profits and even destroy your business. The key to making sure that all the effort and money you have invested in a business doesn't disappear when a disaster strikes is to protect it with the appropriate insurance. Key Employee The sudden loss of a key employee could strike a major blow to a business particularly if that person is the key contact for customers, suppliers and involved in the firms management. The loss of key staff members may also make the running of the business less efficient and result in the loss of revenue and profit. Losses caused by the death or disability of a key employee are insurable. These policies will compensate the business against significant losses that result from that person's death or disability. The amount and cost of insurance needed for a particular business depends on the situation and the age, health and role of the key employee. Generally key employee life insurance pays a death benefit to the company when the insured employee dies. Policies are normally owned by the company, the company pays the premiums and is, in most cases, the beneficiary.   Split-Dollar Life Insurance Split-dollar is an arrangement that allows a person who needs insurance protection to secure it at a cost that is less than it would be if this person had to purchase the insurance on his or her own. This concept refers to the division, or split, of the insurance proceeds. Usually the individual splits the premium payments with another individual or the employer. The two parties share in the proceeds of the insurance based on the arrangement agreed upon. Sometimes one of the parties can contribute the entire premium while the insured person makes no contribution to the premium, “non-contributory split-dollar plans” or in the case of an employer, an “employer pay-all plan.” Split-dollar plans incorporate the use of permanent life insurance, and could be used in some of the following situations: A fringe benefit for certain employees. A salary continuation plan to the surviving spouse of a key employee. For a stockholder to provide personal insurance protection at a reasonable cost Funding a cross-purchase buy-sell arrangement. Funding for designated purchaser upon death of business owner   EXECUTIVE BONUS PLAN Executive Bonus Plans are selective compensation programs designed for the life of your business. An Executive Bonus Plan may help you attract and retain productive employees by rewarding them with a bonus that can be used to purchase life insurance. You can select which employees receive the bonus - without IRS approval - and the business gets the advantages of tax-deductible premiums and compensation flexibility. In addition to the life insurance protection provided, the policy's cash value can be used by the executive as a source of retirement funds.  Executive Bonus Plans are designed to attract productive employees while encouraging existing staff members to remain with your company or organization.   DEFERRED COMPENSATION Deferred Compensation plans are incentive programs designed to provide a benefit to an executive upon his or her retirement or to the survivors at the executive's death. The main advantage of a deferred compensation plan is that the executive may defer compensation until some future date when the executive's income tax bracket may be lower than during peak earning years. Life insurance can be used to fund the deferred compensation plan as part of a Key Employee Life Insurance policy or as part of an incentive program for selected key employees. As Key Employee Life Insurance, deferred compensation plans can be used during an employee's working years to help replace his or her service in the event of an untimely death. As a Retirement Incentive Program, it can be used as a reward for service and an incentive to stay (no benefits are paid if the employee leaves prior to retirement). Funding a deferred compensation program with life insurance is an ideal way to attract, retain and reward key employees while protecting the business.