Key Employee Retention & Retirement – The Life Insurance Gap
In the business market, top performers often command a more robust suite of benefits than the rest of the company. Unfortunately for some, that is not always the case. In fact, on a percentage basis, the top performers often lag the rest of the company in three fundamental areas. Fortunately, this “Benefits Gap” can be solved, either within the benefits plan itself or with individual solutions.
Where’s the Gap?
The Benefits Gap shows up in three areas most frequently:
- Retirement Planning
- Life Insurance Protection
- Disability Income Protection
Even if the client “already has” these benefits in place at their employer, a quick look at the benefits relative to the client’s income surfaces a significant shortfall.
- The more you make, the larger the gap
- There are limitations on group life insurance plans
- Benefits from group life insurance plans alone can leave a sizeable gap
The figure below shows how the Life Insurance Gap increases as compensation increases:
How to Close the Gap?
Ultimately, it comes down to having a supplemental life insurance plan. In the employee benefits setting, that can be accomplished via an executive carve out that offers additional, personally owned and portable life insurance protection to the executives in the organization. Absent an employer that is willing to implement a plan, it’s up to the individual to make up the difference. In that case, leveraging today’s modern application and underwriting processes can allow for implementation of significant amounts of life insurance with minimum interruption of the client’s busy schedule. Also important: If the client is relying solely on employer sponsored plans that are NOT portable, personally owned insurance is the only way to address this issue without leaving the client exposed should they change jobs.
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The contents of this document should not be considered as tax or legal advice. Any information or guidance provided is solely for educational or informational purposes and should not be relied upon as a substitute for professional advice. It is always recommended to consult with a licensed financial or legal advisor for specific guidance related to your individual situation.