Executive bonus plans, especially when paired with the Vitality PLUS rider, can be a compelling way for businesses to provide additional supplemental benefits to key employees or executives. See how a small business owner was able to leverage this powerful solution in a recent case study.
Peter is the owner of a small auto service center that specializes in high-end vehicles. Bob is a key employee that brings expertise and skill to the business and Peter would like him to remain with the business for the next 17 years, until retirement. Additionally, Bob has recently expressed some concerns about retirement planning and what would happen to his family should something happen to him. In addition, Bob is passionate about living a healthy life - he loves to hike and cook healthy meals with his family.
The Plan: 162 Executive Bonus utilizing Accumulation IUL with Vitality PLUS
Working with his financial professional, Peter wanted a plan to help retain and reward his key employee and he was also interested in wellness programs. Ultimately, he decided that his business would provide Bob with an Executive Bonus using a John Hancock Accumulation IUL with Vitality PLUS.
How it Works
The Executive Bonus Plan with Accumulation IUL offered the business an easy-to-implement and administer solution. The value of the plan was further enhanced through its tax-free death benefit, supplemental income potential, along with Vitality PLUS. For Bob, this solution offers value in the form of death benefit protection and supplemental income at retirement. What’s more, Vitality PLUS can have a positive impact on the overall performance of the life insurance policy, while also encouraging Bob to live a healthy life. And from Peter’s perspective, healthy employees may lead to more productivity, lower health care costs and more!
The figures used in this case study are hypothetical, for discussion purposes only, are not guaranteed and may not be used to project or predict results. Actual results may be more or less favorable. Specific product and policy elements would be found in a policy illustration provided by an insurer. With any decision regarding the purchase of life insurance, a client would need to determine which type of life insurance product is most suitable for their specific needs.
This material does not constitute tax, legal, investment or accounting advice and is not intended for use by a taxpayer for the purposes of avoiding any IRS penalty. Comments on taxation are based on tax law current as of the time we produced the material. All information and materials provided by John Hancock are to support the marketing and sale of our products and services, and are not intended to be impartial advice or recommendations. John Hancock and its representatives will receive compensation from such sales or services. Anyone interested in these transactions or topics may want to seek advice based on his or her particular circumstances from independent advisors.
Loans and withdrawals will reduce the death benefit, cash surrender value, and may cause the policy to lapse. Lapse or surrender of a policy with a loan may cause the recognition of taxable income. Policies classified as modified endowment contracts may be subject to tax when a loan or withdrawal is made. A federal tax penalty of 10% may also apply if the loan or withdrawal is taken prior to age 59 1/2.
Life insurance death benefit proceeds are generally excludable from the beneficiary’s gross income for income tax purposes. There are few exceptions such as when a life insurance policy has been transferred for valuable consideration.
Vitality is the provider of the John Hancock Vitality Program in connection with policies issued by John Hancock.