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October 04, 2016

Insurance Ideas to Bolster Executive Compensation

According to the Occupational Outlook Handbook from the Bureau of Labor Statistics, there were 2,467,500 top executives in the corporate market in 2014, and 147,000 more are expected to join the ranks by 2024. Experienced executives are mission-critical to the success of any company, and losing one or more of them can be a devastating blow to a business. These successful executives are also a valued commodity to competitors, and competition for them is only intensifying.

That’s why a carefully-crafted executive compensation package is so crucial today to recruit, motivate, and retain the superstars you need to drive your business success.

Executives have unique financial requirements.

Highly compensated executives have unique needs in terms of total compensation planning, tax deferral, estate planning, life insurance, and other financial considerations. So a standard employee benefit plan just won’t cut it when it comes to providing them with the means to save for the kind of retirement that suits their standard of living. The average employee benefit package also doesn’t include supplemental benefits such as life or disability insurance, both important financial safety nets.

Are you including these supplemental benefits in your executive compensation packages?

Life and disability insurance make perfect sense for your executive compensation packages. They’re inexpensive to offer, and they carry high perceived value for those concerned about providing for their loved ones, no matter what the future holds.

In addition, executives constantly operate in high stress environments with demanding schedules, making them more susceptible to stress-related illnesses. That’s even more incentive for them to have – and for you to offer – supplemental life and disability insurance as part of their compensation packages. Below are two great options.

Life Insurance

Life insurance is one of the most versatile financial tools at your disposal, and there are numerous ways to use it in conjunction with executive compensation packages, including:

  • As a supplemental benefit
  • To fund plans such as non-qualified deferred compensation (NQDC) or supplement executive retirement plans (SERPs).
  • As part of an Executive Bonus Plan

Disability Insurance

While group long-term disability insurance provides a base income for employees who are unable to work due to a disability, highly compensated executives need a greater level of income protection. Caps on the benefit levels of group policies (such as coverage to 60% of gross pay up to a max of $500 per week) often leave execs sadly underinsured for the risk of a disabling injury or illness. Supplemental individual disability insurance, a guarantee-issue basis, is a cost-effective option for employers and a reliable tool for executives who want added financial protection.

Partner with a pro

Ready to explore your options? Talk to the life insurance professionals at Heffernan Insurance Brokers. We’ll work with you to put together a package that balances the needs of your valued executive team with the financial goals of your business.

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