Insert subtitle here. Executive Compensation

Sun Executive UL for the Small Business Market

3 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

4 Different goals; one flexible solution Business members can have different goals for an executive benefit plan CFO: Wants a solution with minimal impact on the bottom line Key Person: Expects rewards plus an incentive to stay and work hard CEO: Needs help recruiting, rewarding, and replacing executive talent Owner: Is looking to fund own retirement and succession plan

5 Different goals; one flexible solution Qualified vs. Non-Qualified plans Qualified PlansNon-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 costsCostly to administerCan be cost efficient ComplexityRed tapeNo red tape issues Vesting requirements Strict vesting rules; no golden handcuffs No vesting rules Plan designLimited flexibilityFlexible Limits Caps for highly compensated employees No caps

6 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 Substitute or supplement for equity-based comp packages Allow you to select which key employees benefit Motivate key employees, maximizing productivity Non-Qualified Plans

7 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

8 Different goals, one flexible solution 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 WHEN FUNDED APPROPRIATELY, DEFERRAL OF CURRENT SALARY OR BONUSES ON A PRE-TAX BASIS Deferred Compensation Plan Executive Benefits

9 Different goals; one flexible solution Funded by the business for the benefit of select key employees Provides key employees with supplemental retirement income On top of defined contribution plans, give key employees more robust retirement package Supplemental Executive Retirement Plan (SERP) EMPLOYER AGREES TO PAY SELECT KEY EMPLOYEES A SPECIFIED INCOME FOR A SPECIFIED TIME, WITH NO EMPLOYEE DEFERRAL Executive Benefits

10 Different goals, one flexible solution 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 WHEN FUNDED APPROPRIATELY, DEFERRAL OF CURRENT SALARY OR BONUSES ON A PRE-TAX BASIS Deferred Compensation Plan Executive Benefits

11 Different goals; one flexible solution 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 Executive Bonus BONUS MADE TO SELECT EXECUTIVES TO BUY LIFE INSURANCE Executive Benefits

12 Different goals; one flexible solution Provides option of low-cost life insurance to the employees Business and employee split the cost of policy premium In event of insured’s death, company recovers paid premiums; employee’s beneficiary receives policy face amount ALLOWS A BUSINESS TO RECOVER PREMIUMS PAID, AND CAN BE STRUCTURED SO THE EMPLOYEE’S BENEFICIARY CAN RECEIVE THE FULL POLICY FACE AMOUNT IF DESIRED Split Dollar Executive Benefits

13 Different goals; one flexible solution 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 LIFE INSURANCE OWNED BY AND PAYABLE TO THE BUSINESS TO INDEMNIFY IT UPON THE DEATH OF A KEY PERSON Key Person Indemnity Business Planning

14 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 Different goals; one flexible solution LIFE INSURANCE USED TO FUND A BUY-SELL AGREEMENT Buy-Sell Agreement Funding Business Planning

15 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) Innovative Features Emergency Travel Assistance Rider - Assist America  Benefit Charitable Giving Benefit Rider Our fastest growing product in sales volume… Average Case Target Premium is $808K* *As of 7/09

16 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

17 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?

18 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

advantage.com/advanced Contact Information Director of Advanced Markets Richard Finkelstein ext 139 Senior Marketing Consultant David Clifford ext 134