Universal life insurance? bank ? employee retention?

[worriedmom1968]

would like to know if anything has been offered his before or know anything about this type of program. so im giving as much information as i have for right now, my work is offering an employee retention program by offering life insurance with a Retirement program together. (bank giving the loan is PNC and insurance provider is Nationwide from what we have been told we have to do a medical exam to see how much life insurance will give us coverage and after that amount is decided lets say 2 million policy a bank gives a loan to invest into the Index funds/S&P500 funds. during the 4 year program my company is the beneficiary 50% of the policy and the bank also 50% since they are giving the loan, while the 4 years my company will invest and put money in the policy yearly, after 4 years the policy beneficiary gets transferred to my name instead of my company. if the index does bad i dont get charged anything just 0% profit that year but if it does well im capped at 11% profit that year. has anyone heard of this before ? is it a good idea ? its completely cost free for me from what i been told and money at the end of 10-15 years i can take out for my retirement tax free.

 

[kim5398]

@worriedmom1968 I don’t personally recommend doing premium finance but yes this sales concept has been done. It can work if you have the right set up. Some of the timelines you mention are a little short but there are other factors depending on the business use if this.

 

[worriedmom1968]

@kim5398 is there any risk for me to accept this offer ? any negatives to it? is there more information i can find online about it

 

[kim5398]

@worriedmom1968 I mean if it really is “no cost” to you then it really is just the act of getting approved and time and effort that may take, but I am doubtful that there aren’t some kinds of strings attached to the benefit.

This sounds like some kind of deferred compensation arrangement of which there are a few types. It could also be a version of split dollar but I don’t think so based upon what you have said. You can research non-qualified deferred compensation plans and find material that could highlight what sounds like your deal.

 

[ralitza]

@worriedmom1968 A big risk is you won’t be able to get your own (new) life insurance policy because carriers will say you already have enough and it isn’t financially suitable for you to have more.

 

[tabinek]

@ralitza This should be higher.

 

[beetx]

@worriedmom1968 It’s legit type of deferred compensation plan. Protects company from a key employee death, incentivizes a key employee to stay at the company for certain number of years to receive the benefit, tax efficient retirement income for a key employee.

 

[worriedmom1968]

@beetx yes that the way they explained it, its a family business that has grown a lot and I'm 1 of the "key" employees that's been there for a while, would be very hard to replace my roll and the knowledge i have. Do you have any advice on what I should look at? or a link to something I can look up online.

 

[beetx]

@worriedmom1968 https://www.guardianlife.com/life-insurance/key-person

 

[genebgto]

@worriedmom1968 I have never heard of such a scheme. Can you post a link to the text of this program or attach a screenshot as I feel some details might be missing

 

[justadog]

@worriedmom1968 Who is responsible for premium payments when the 4 years are up?

 

[viveri]

@justadog After that amount of the time there I’ll be enough flow for it to sustain itself

 

[justadog]

@viveri If the crediting rates meet target year after year. If it doesn’t, the onus and risk is on the insured to notice the shortfall and fund it.

 

[viveri]

@justadog You are correct. That’s why it’s important on who you work with! Hopefully they are working with well knowledge people who will monitor the account.

 

[dinkold]

@worriedmom1968 So long as it is truly a non recourse loan or any recourse is limited to the policy cash value and your employer, why not try it. As others have said, I am not a fan of premium financing but I have been retired 10 years and am not familar with the current programs. I do play golf regularly with a fella that is still in the business that told me he is regularly doing premium financing. Now his clients are in the UHNW range, so that can make a difference, but in your case I suppose your employer and all the employees likely are getting as good a deal as possible.

 

[tamaraz]

@worriedmom1968 That’s weird this is going through your employed. What will happen to the premiums after 4 years? This is an infinite banking concept. Look up some videos to educate yourself. You can do this outside of your work and it will give you more control of your policy. It just won’t be free