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Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN0830-12152-0916 Your Qualified Plan Can Pay For Your.

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Presentation on theme: "Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN0830-12152-0916 Your Qualified Plan Can Pay For Your."— Presentation transcript:

1 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Your Qualified Plan Can Pay For Your Life Insurance Protect What You’ve Built.

2 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Disclosures 2  The Voya™ Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.  Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and its products issued. All are members of the Voya™ family of companies.  All guarantees are based on the financial strength and claims paying ability of the issuing insurance company who is solely responsible for all obligations under its policies.

3 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Many People Need Life Insurance Protection 3  Life insurance helps protect your family from financial loss in the event of your death

4 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Many People Need Life Insurance Protection 4  Life insurance helps protect your family from financial loss in the event of your death  It pays income tax free death benefits to provide financial stability after you’re gone* *Proceeds from an insurance policy are generally income tax free and if properly structured, may also be free from estate tax.

5 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Many People Need Life Insurance Protection 5  Life insurance helps protect your family from financial loss in the event of your death  It pays income tax free death benefits to provide financial stability after you’re gone  These death benefits can be used in several ways: –Create income –Pay off debts –Pay for higher education –Retire a mortgage

6 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN The biggest problem with life insurance is paying for it! 6 There are lots of demands on your income. Finding the funds to pay life insurance premiums can be difficult.

7 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Three Alternatives to Pay Premiums 7  Personal Dollars  Business Dollars  Qualified Plan Dollars

8 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Option #1: Personal Dollars 8  A simple option  You must use after-tax dollars because premiums aren’t deductible  Using after-tax dollars can be expensive  You must earn more so that after taxes are paid, enough remains to pay the policy premium

9 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How Much Do You Have To Earn To Pay $1,000 in Premium? 9  15% Tax Bracket $1,176  25% Tax Bracket $1,333  33% Tax Bracket $1,493  35% Tax Bracket $1,538

10 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Option #2: Business Dollars 10  Your business can use several strategies to help you pay premiums: –Salary increase or bonus –Split dollar arrangement –Loan from the business

11 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Paying Premiums With Business Dollars 11  Your business can use several strategies to help you pay premiums: –Salary increase or bonus –Split dollar arrangement –Loan from the business  Unfortunately, many businesses aren’t willing to carve out funds for employee life insurance

12 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Option #3: Qualified Plan Dollars 12  Some qualified retirement plans may purchase life insurance on behalf of participants  The plan must allow life insurance as an investment  The participant must meet underwriting standards

13 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Limits for Life Insurance in Qualified Plans 13  Whole Life Insurance –Up to 50% of plan contributions  Other Life Insurance (Term/UL/VUL) –Up to 25% of plan Contributions  Profit Sharing Plans –“Seasoned Money” Exception

14 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How Life Insurance In a Qualified Plan Works 14  The plan trustee applies for the policy and pays the premiums annually  The pure insurance value of the portion payable to your beneficiary is taxable income each year

15 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN How Life Insurance In a Qualified Plan Works 15  Policy death benefits are distributed in two parts: –The cash value portion is paid to the plan trustee and distributed with the other investment assets –The pure insurance portion is paid directly to the policy beneficiary free of income taxes

16 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Paying Premiums With Qualified Plan Dollars 16 Potential advantages  Premiums are paid with pre-tax dollars  Your cost is the income tax due on the economic value of the death benefit  The plan trustee administers the policy  You can focus on getting the coverage you need  Especially useful for people who aren’t in excellent health or who use tobacco products

17 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Paying Premiums With Qualified Plan Dollars 17 Potential advantages  Premiums are paid with pre-tax dollars  Your cost is the income tax due on the economic value of the death benefit  The plan trustee administers the policy  You can focus on getting the coverage you need  Especially useful for people who aren’t in excellent health or who use tobacco products Potential disadvantages  It’s not free—there is a cost  When you retire or change jobs the plan may not be able to continue to own the policy; life insurance policies cannot be rolled over to an IRA  Your retirement benefits from the plan may be decreased  The cash value portion of the death benefit is added to the other investments and taxed as ordinary income when distributed; life insurance policies cannot be rolled over to an IRA.  Policy death benefits may be subject to estate taxes

18 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Qualified Plan Life Insurance In Action 18  Jim Williams, 50, participates in a defined contribution pension plan and needs $500,000 of life insurance coverage to protect his family.  The policy’s annual premium is $5,000.  Jim doesn’t want to change his lifestyle to pay this annual premium. He wonders if there is an alternative that will be less expensive.  His pension plan may be able to purchase the policy for him.

19 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Qualified Plan Life Insurance In Action 19  Jim’s qualified plan has a provision that allows the plan trustee to purchase life insurance.  The plan trustee applies for the policy; Jim names his spouse as the policy beneficiary.  Jim has secured $500,000 of life insurance protection for his family and transferred the premium to his qualified retirement plan.

20 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Qualified Plan Life Insurance In Action 20  Jim’s out of pocket cost is the income tax he must pay on the value of the $500,000 of coverage.  This value is determined under IRS Table 2001 (the value increases each year).  The premiums the plan pays don’t impact on Jim’s annual income tax cost.  If Jim is in a 28% tax bracket, his tax cost is: -at age $322 -at age $581 -at age $911 -at age $1,660

21 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Qualified Plan Life Insurance In Action 21  If Jim retires or decides to change jobs, the plan will not be able to continue to own the policy and pay premiums.  Jim has three alternatives: 1.Instruct the trustee to surrender the policy (if he no longer needs the life insurance coverage), 2.Take the policy out of the plan as a plan distribution (and pay income taxes based on the fair market value of the policy), or 3.Purchase the life insurance policy from the plan for its fair market value.

22 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN A Useful Premium Alternative 22  Using qualified plan dollars to acquire life insurance coverage can be financially attractive for many people  Your ability to use qualified plan dollars depends on four things: –Do you participate in a qualified plan? –Is your plan one that is allowed to purchase life insurance? –Does your plan authorize the plan trustee to purchase life insurance for participants? –Are you insurable?

23 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Your Voya Life Companies’ Representative Can Help 23  If you can’t answer these questions, your Voya representative may be able to help  Your Voya representative can help your find out if: –Your qualified plan can use life insurance as an investment –Your plan trustee has the authority to purchase life insurance –You are insurable

24 Do not put content on the brand signature area ©2014 Voya Services Company. All rights reserved. CN Life Insurance is a financial tool you may need but don’t want to pay for. Your Qualified Plan may be able to help! Talk to your Voya Financial™ professional today!


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