Do you Understand the Difference between BOES and SERPs?
Do You Know When to Recommend one Over Another?
CreativeOne works in conjunction with the business experts at Principal® Financial Group. They live and breathe Executive Bonus Plans (BOES) and Supplemental Executive Retirement Plans (SERPs) every day, and are only a phone call away. Let us help coordinate the resources you need and be part of your “back office.”
The Sale
Recruiting new talent is only one part of the equation when putting together a team. The other is incentivizing existing top performers to stay. That small nuance can make all the difference in designing an effective incentive package.
In the case of a SERP, the assets stay with the company, and if the employee wants to realize the benefits, they have to stick around. Of course, there is much more than this one variation in the design process, which is why Principal’s BOES experts and SERP Select are so powerful.
As an advisor or producer, you don’t need to be the expert, you just need to KNOW the expert. Read on to find out how a SERP works and check out the suite of resources Principal can deploy to help you close your next case.
The Process
After establishing a defined contribution deferred compensation agreement with key employee(s), the employer determines how much they want to contribute to the plan (employer contributions only). Life insurance is used to help finance the plan.
Upon a triggering event, such as separation from service, retirement, death or disability, a vested payout to the key employee may begin. Dollars to complete the payout may come from company cash flow, distributions from the life insurance policy or transfer of ownership of the life insurance policy.
Benefits to the Employer:
- Effective method to recruit, reward and retain key employees.
- Employer may deduct the benefits paid to the key employee(s) at any distribution event.
- Tax-efficient life insurance can be an effective way to finance benefits to select employees.
- Complimentary administrative services offered through Principal.
Target Markets
This plan is designed for:
- C corporations (owners and key employees).
- S corporations, limited liability companies (LLCs) or partnerships (offered to key employees only).
- Businesses with strong continuity in place.
- Financially stable businesses (profitable, good cash flow, long history).
- Owners wanting to offer an extra benefit to one to five key employees.
- Annual contributions of $25,000 to $150,000.
This plan is NOT designed for:
- Not-for-profit organizations.
- Owners of S corporations, LLCs or partnerships.
- Larger cases or situations where the employer is looking for greater flexibility in case design and more robust administrative services.
The Fact Finder and Plan Design
Plan design is a breeze when you work with Principal. Simply complete this Request for Proposal and the plan will be designed to your client’s specifications, including not only an illustration, but also a financial model.
The Product
Principal offers a variety of competitive life insurance products for the executive benefits market. Whether your clients are looking for fixed or variable products, Principal Financial Group has it all. A product that works particularly well for this plan design is Principal Variable Universal Life (VUL) – Business. It offers a high, early-cash value that can be beneficial in these scenarios.
The Underwriting
- Have a willing buyer? Use accelerated underwriting to get the case through quickly for face amounts of $1M or less.
- What about multi-life underwriting? Principal offers Guaranteed Issue and Simplified Issue, as well as other competitive options.
The Administration
Even the smallest SERP case can benefit from the robust reporting that is part of the ongoing administration Principal offers in this space. Learn from the pros at Principal about why their no-cost business administrative services platform is a critical part of working in this market space. Then, share with your clients why you should leave the “administrative services details” to Principal.
The Training and Resources
While there is a ton of information in this email, there is much, much more to the Executive Bonus story, give me a call today at 800.992.2642, and let’s get you connected with resources you’ll need to snag your next business client