Executive Compensation
Insert subtitle here.
Sun Executive UL for the Small Business
Market
Disclosures
Sun Life Financial, its distributors, and its respective representatives do not provide tax, accounting, or legal
advice. Any tax statements contained here in are not intended or written to be used, and can not be used, for the
purpose of avoiding U.S. federal, state, or local tax penalties. Clients should consult their own independent
advisors about any tax, accounting, or legal statements made herein.
Universal Life products are issued by Sun Life Assurance Company of Canada (Wellesley Hills, MA) and in New
York, by Sun Life Insurance and Annuity Company of New York (New York, NY). All guarantees are based on the
claims-paying ability of the issuing company. All companies are members of the Sun Life Financial group of
companies.
©2010 Sun Life Assurance Company of Canada (U.S.). All rights reserved. Sun Life Financial and the globe symbol
are registered
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Different goals; one flexible solution
• Business members can have different goals for an
executive benefit plan
CEO:
Needs help
recruiting, rewarding,
and replacing
executive talent
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CFO:
Owner:
Key Person:
Wants a solution
with minimal impact
on the bottom line
Is looking to fund
own retirement and
succession plan
Expects rewards
plus an incentive to
stay and work hard
Different goals; one flexible solution
• Qualified vs. Non-Qualified plans
Qualified Plans
Non-Qualified Plans
Taxation
Contributions are deductible to the
employer and employee
Contributions are not tax
deductible
Discrimination rules
Most employees have to be
eligible
None
Administration costs
Costly to administer
Can be cost efficient
Complexity
Red tape
No red tape issues
Vesting requirements
Strict vesting rules; no golden
handcuffs
No vesting rules
Plan design
Limited flexibility
Flexible
Limits
Caps for highly compensated
employees
No caps
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Different goals; one flexible solution
• What Non-Qualified plans offer
Increase your
company’s
market position
Greater
retirement benefits
for you and key
employees
Help you attract,
reward, and retain
key employees
Non-Qualified
Plans
Substitute or
supplement for
equity-based comp
packages
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Allow you to
select which key
employees
benefit
Motivate key
employees,
maximizing
productivity
Different goals; one flexible solution
• Non-Qualified plan business strategies:
Deferred Compensation Plan
Supplemental Executive Retirement Plan (SERP)
Executive Bonus Plans
Split Dollar
Key Person Indemnity
Buy-Sell Agreement Funding
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Different goals, one flexible solution
Executive Benefits
Deferred Compensation Plan
WHEN FUNDED
APPROPRIATELY,
DEFERRAL OF
CURRENT SALARY
OR BONUSES ON A
PRE-TAX BASIS
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• An employer promise to pay an executive a
future benefit
– May be Qualified:
• Must meet provisions to “qualify” for special tax
treatment
– or Nonqualified:
• Offer greater flexibility in design
• Must meet fewer rules
• Discretionary
• BUT, contributions are not currently deductible
Different goals; one flexible solution
Executive Benefits
Supplemental Executive Retirement Plan (SERP)
EMPLOYER
AGREES TO PAY
SELECT KEY
EMPLOYEES A
• Funded by the business for the benefit of select key
employees
• Provides key employees with supplemental
retirement income
SPECIFIED INCOME
FOR A SPECIFIED
TIME, WITH NO
EMPLOYEE
DEFERRAL
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• On top of defined contribution plans, give key
employees more robust retirement package
Different goals, one flexible solution
Executive Benefits
Deferred Compensation Plan
WHEN FUNDED
APPROPRIATELY,
DEFERRAL OF
CURRENT SALARY
OR BONUSES ON A
PRE-TAX BASIS
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• An employer promise to pay an executive a
future benefit
– May be Qualified:
• Must meet provisions to “qualify” for special tax
treatment
– or Nonqualified:
• Offer greater flexibility in design
• Must meet fewer rules
• Discretionary
• BUT, contributions are not currently deductible
Different goals; one flexible solution
Executive Benefits
Executive Bonus
BONUS MADE
TO SELECT
EXECUTIVES TO
BUY LIFE
INSURANCE
• Potential for immediate income tax deduction
• May provide golden handcuffs
• Discriminatory so key execs can be rewarded
• Inexpensive to administer
• Can be life insurance protection and supplemental
retirement income for key employee
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Different goals; one flexible solution
Executive Benefits
Split Dollar
ALLOWS A
BUSINESS TO
RECOVER
PREMIUMS PAID,
• Provides option of low-cost life insurance to the
employees
• Business and employee split the cost of policy
premium
AND CAN BE
STRUCTURED SO
THE EMPLOYEE’S
BENEFICIARY CAN
RECEIVE THE FULL
POLICY FACE
AMOUNT IF
DESIRED
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• In event of insured’s death, company recovers paid
premiums; employee’s beneficiary receives policy
face amount
Different goals; one flexible solution
Business Planning
Key Person Indemnity
LIFE INSURANCE
OWNED BY AND
PAYABLE TO THE
BUSINESS TO
INDEMNIFY IT
UPON THE DEATH
OF A KEY
PERSON
• Protects your business in the event of the death
of a key employee
• Provides liquidity needed to:
– Maintain operations
– Replace loss of employee by recruiting/training
new employee
– Contract with necessary resources to keep
business running
– Overcome potential drop in business
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Different goals; one flexible solution
Business Planning
Buy-Sell Agreement Funding
LIFE INSURANCE
USED TO FUND
A BUY-SELL
AGREEMENT
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• Good succession planning depends on a
well-drafted, well-funded buy-sell agreement
• Provides clear and defined succession/exit strategy to:
– transform control of the business into retirement
wealth
– insure that the future of the business is being
managed by desired parties
– Insure business is owned as intended in the event of
retirement, disability or death
Sun Executive UL Highlights
• High Target Premiums with Heaped
Commissions
• High Potential First Year Cash Values
• Underwriting Flexibility
• GI (10+ lives)
• XGI (5-9 lives)
• Full Medical Underwriting (1-4 lives)
Our fastest growing product
in
sales volume…
Average Case
Target Premium
is $808K*
• Innovative Features
• Emergency Travel Assistance Rider Assist America Benefit
• Charitable Giving Benefit Rider
*As of 7/09
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What Should You Be Looking For?
• Business owners who may be personally underinsured
• Business owners who may not have reviewed their personal insurance for a
number of years
• Owners of small to medium size businesses with business continuation needs
• Business owners who want to recruit, retain, and reward key employees
• Businesses that may lose key employees if supplemental executive benefits
are not offered
• Business owners who want to supplement their (or their employee’s)
retirement plan in a tax advantaged manner
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Questions to Ask
The plan you have in place…is it the right plan for you,
your business, your key employees?
Do you have the right type of executive benefit plan(s) in place now for
the current state of your business?
Are your plan funding vehicles sufficient to meet future personal and
business objectives for you and your key employees?
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Disclosures
Sun Life Financial, its distributors, and its respective representatives do not provide tax, accounting, or legal
advice. Any tax statements contained here in are not intended or written to be used, and can not be used, for the
purpose of avoiding U.S. federal, state, or local tax penalties. Clients should consult their own independent
advisors about any tax, accounting, or legal statements made herein.
Universal Life products are issued by Sun Life Assurance Company of Canada (Wellesley Hills, MA) and in New
York, by Sun Life Insurance and Annuity Company of New York (New York, NY). All guarantees are based on the
claims-paying ability of the issuing company. All companies are members of the Sun Life Financial group of
companies.
©2010 Sun Life Assurance Company of Canada (U.S.). All rights reserved. Sun Life Financial and the globe symbol
are registered
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www.Partners advantage.com/advanced
Contact Information
888-251-5525
Director of Advanced Markets
Richard Finkelstein ext 139
Senior Marketing Consultant
David Clifford ext 134