Decision Tree Insurance

Category: Employee Benefits

Getting a Policy Out of a Qualified Plan: Swap-Out vs. Distribution

Stick figure business owner comparing swap-out, distribution, and surrender options for removing a life insurance policy from a qualified retirement plan.

If a qualified plan is holding a life insurance policy on your life, that policy has a deadline the plan documents rarely spell out in plain language: it has to leave the plan before your distributions begin. Not necessarily surrendered — but resolved, one way or another, on a schedule the IRS sets rather than […]

Section 162 vs. Pretax For Purchasing Life Insurance: Which Funds Your Plan?

Stick figure business owner comparing Section 162, pretax rollover money, and plan contributions as three ways to fund life insurance for a business owner.

Article #57 — Section 162 vs. Pretax (Preview) The short answer: A business bonusing itself money to buy a policy (Section 162) and a business redirecting old retirement money to buy a policy (the pretax route) get lumped together in search, but they’re opposite mechanisms — new money taxed now versus old money still deferred. […]

How Life Insurance Fits Inside a Cash Balance Plan

Stick figure business owner reviewing a cash balance plan and learning how limited life insurance inside the plan can help protect the retirement promise if the participant dies early.

Cash balance plans have a name problem, and it’s worth clearing up before anything else. “Cash balance.” It sounds like there’s an account with your name on it, holding actual dollars, waiting for you. There isn’t. It’s a hypothetical bookkeeping entry — a number on paper backing a promise, not a pile of dollar bills […]

Is a 412(i) Plan a Scam? The 2004 IRS Crackdown, Explained

Stick figure infographic explaining 412(e)(3) fully insured pension plans, the 2004 springing cash value loophole, IRS fair market value rules, and incidental benefit limits for life insurance.

In 2004, my first year in this business, a guy in my office was dating a woman whose father built these plans for a living. Chris brought me in on it — walked me through how a policy’s cash value could sit artificially low for the first few years, then “spring” up to its real […]

What Is BOLI? Bank-Owned Life Insurance Explained

Stick figure whiteboard illustration explaining bank-owned life insurance, showing a bank owning a permanent life insurance policy on key employees to offset benefit costs and strengthen its balance sheet.

If you’ve ever been told that permanent life insurance is a bad investment — overpriced, oversold, something you’d be smarter to skip in favor of a mutual fund — here’s a fact that doesn’t fit that story: the most risk-averse, heavily regulated institutions in the American economy hold billions of dollars of it themselves. I […]

What Is Captive Insurance? A Business Owner’s Guide

Stick figure business owners comparing commercial insurance premiums with a captive insurance company that covers recurring risk, builds reserves, and keeps underwriting profit inside the business.

Most business owners who read this article won’t qualify for what it describes — and that’s exactly the point. A captive insurance company isn’t a product you buy off a shelf. It’s a structure built for businesses with real, recurring risk exposure and the profitability to plan around it. But if your business does qualify, […]

What Is COLI? Corporate-Owned Life Insurance Explained

Stick figure business owner using corporate-owned life insurance to fund a company promise, build cash value, protect the business, and comply with notice and consent rules.

You’ve probably heard the term corporate-owned life insurance somewhere — from an advisor, in a headline about a lawsuit, maybe from your own accountant — and you’re not sure if it’s a legitimate financial tool or something to be suspicious of. That was exactly where Jack started, too. Jack owns a specialty manufacturing company he […]

Does My Employer Have Life Insurance on Me? Your Rights

Stick figure employee reviewing workplace paperwork and asking whether their employer has corporate-owned life insurance on them, with notice and consent rights explained

Maybe it was a headline you half-remembered, a coworker’s offhand comment, or a line you noticed buried in a stack of paperwork you signed years ago and never thought about again. However it got in your head, the question is a hard one to shake once it’s there: does my employer actually have a life […]

Split-Dollar Life Insurance: The Golden Handcuff Strategy

Infographic diagram explaining corporate split-dollar life insurance arrangements, comparing the Economic Benefit Regime (endorsement method where the business owns the policy) and the Loan Regime (collateral assignment method where the employee owns the policy) for key employee retention.

You already tried the easy answer. An ordinary raise or unrestricted bonus doesn’t stop a competitor from writing your best person a bigger check next year. Once that compensation is paid, the employer generally has no ownership or repayment claim attached to it — the money is simply gone. If you’re looking at split-dollar life […]

Section 162 Executive Bonus Plan: Is It Right for You?

Section 162 Executive Bonus Plan diagram Decision Tree Insurance

Section 162 Executive Bonus Plans: How Corporations Fund Executive Life Insurance Tax-Deductibly I want to be really straight with you about section 162 executive bonus plans. Honestly, I don’t see the value in most of the ones I see sold — it took me a while to understand why a business owner would commit to […]