Thursday, March 15, 2012

selling life insurance

Posted by Milton at 4:18 AM

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Selling Life Insurance: 162 Bonus Plans

Posted on Tue, Nov 08, 2011
by Dan Viñal

Selling Life Insurance to Small Business Owners

Many small business owners cannot afford to install or maintain any sort of qualified retirement plan for their entire company – including ALL their employees.selling insurance
But they still want to fund their own retirement (and maybe include a few of their key people) using tax deductible corporate dollars.
Well, that's what 162 Bonus Plans are all about. "162" refers to the Internal Revenue Code Section that permits a business to deduct bonus compensation to an employee.
And if the business owner is also an employee of his or her own corporation (including a Limited Liability Company) then they should qualify for 162 bonus compensation – on a selective and discriminatory basis.
Which means that the business owner can choose who he or she wants to bonus – even if it's only the business owner himself.  And unlike a "qualified" plan, there are no limitations or restrictions on the amount of the bonus (as long as it is "reasonable").
The business owner can even decide to increase the bonus in good years, or decrease the bonus in bad years.  What's more, a 162 Bonus Plan is easy to set up and easy to change too.
Because there is no IRS approval required, no ERISA compliance or reporting, no administrative fees or management expenses, and no investment risk to either the business or the executive.

Here's How It Works . . .

selling insuranceThe bonus money is deposited directly into any type of cash value life insurance. However, Equity Indexed UL or Par Whole Life generally work best.
And that bonus money is taxable to the executive for the year it is “constructively received”.
But 100% of the growth on that money (under IRC section 7702) and 100% of the money withdrawn during retirement can all be tax free - as a loan against the death benefit (under IRC section 101).
Which means that the business owner only pays tax on the money going in (the bonus) . . . but NOT on the money coming out (the bonus plus the interest earnings or dividends) - which can be two or even three times as much.
And paying the tax on the front end is a small price to pay for tax free growth and tax free withdrawals on the back end . . . without including any other employees . . . without any regulatory compliance or reporting . . . and without any investment risk or administrative fees.

Just Show Them The Videoselling insurance And if you want a fast, easy way to explain the benefits and advantages of a 162 Bonus Plan, simply ask every small business owner you can to watch the five minute WebPrez video titled "Executive Bonus".
Click Here to Watch it Now. It's the sixth one down in the middle column under Business Insurance.
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