Peter Green Insurance Agency LLC

How To Get Paid To Own Life Insurance For Your Business

2019 September 12 by Peter Green Insurance

How Whole Life Insurance Provides Business Owners with Unique Tax Benefits

As a business owner, you have a lot on your plate. You have
all of the responsibilities associated with owning and
managing your business, but you also have the pressure of business growth,  keeping it thriving in a competitive, and challenging market.

Also, you have a personal life outside of your business. Perhaps with a family or individuals that rely on you emotionally as well as financially.

If something were to happen to you, would all of your interests be covered? What would happen to your business if you were to die prematurely? Would your family have the money to cover all of their daily and long-term needs?

While these questions are never pleasant to consider, they are essential to ask yourself. Luckily, there are actions you can take that can help to relieve the pressure these questions bring up. One of the most effective and all-encompassing steps you can take to provide for your family and business is to purchase a life insurance policy.

Several types of life insurance are available to you as an individual and a business owner. And purchasing a policy as a business owner may even be more important than you might think, as you may not be privy to the same benefits that you would be if you were an employee of a company, such as a group life insurance (provided by your employer), disability insurance, or retirement plans.

Types of Life Insurance

Life insurance falls under two main categories: term life insurance and permanent life insurance. Both are aptly named, with term life insurance covering a portion of your life or predefined period. Permanent life insurance will remain in place until you pass. In either case, premiums must be paid when due.

With term life insurance, you determine the amount of your death benefit (or the money that would go to policy benefactors on your passing) and the term length for coverage. For example, you may choose a $100,000 policy for ten years.

While term life insurance is an economical option, it does not offer the extensive benefits that permanent life insurance provides. Also, if you decide you still need coverage after a term policy runs out, a newer term policy could cost more, as they tend to become more expensive the older you get.

Permanent life insurance offers the added benefit of cash value, which is essentially an additional investment element. The premiums you pay on your policy go partially towards the life coverage, and partly towards an investment–either a savings or a stock type account.

With term life insurance, if your policy term ends before death, you get nothing at the end. With permanent life insurance, you always have the investment portion, even if you choose to allow the policy to lapse. And if you continue to pay your premiums, the policy lasts for the length of your life. Upon your death, your beneficiaries receive both the insurance as well as the investment portion.

There are two main types of permanent life insurance: whole life insurance and universal life insurance. With whole life insurance, you pay the same steady premium, and the policy remains intact for as long as you do.

Upon the policyholder’s death, the beneficiaries receive the death benefits, as well as the investment portion of the policy. Universal life insurance offers more flexibility in terms of benefits and premiums but usually requires a medical examination to have access to all of its options.

Determining Your Best Policy

When it comes to choosing the ideal life insurance policy for you, it is essential to consider both your personal life, such as your family and dependents, as well as your business interests.

Business owners require insurance for similar reasons that family providers do–to replace income, to cover the costs of the loss, replace collateral, and to protect the future of the business.

Your employees depend on you to provide their salaries, and for their livelihoods, so you want to be sure that in the event of your untimely passing that your business and their careers don’t fail as a result. That’s why many business owners choose whole life insurance for the many benefits it provides them in both a professional and personal capacity.

Benefits of Whole Life Insurance

The purpose of whole life insurance is to help you fulfill your long-term goals while also protecting your interests for your entire life. While this type of insurance may be more expensive upfront, in the long run, it can more than pay for itself. Whole life insurance offers

1. Consistent premiums.
2. Guaranteed, increasing cash value.
3. Unique tax benefits, loans.

In particular, the tax advantages of whole life insurance can be appealing to business owners. While the person is living, these advantages extend to the cash value, and they apply to the death benefit once the insured has passed.

Because of this, whole life insurance supplies individuals and business owners with a built-in way to grow their wealth tax-free. Additionally, when appropriately managed, whole life policies can offer the policyholder tax-free loans.

Loans can be taken out from the death benefit and do not need to be paid back, providing the policyholder with yet another advantage that other types of policies do not.

Looking to the Future

The SBA Office of Advocacy defines a small business as one that employs at least one but no more than 500 individuals. Typically While your small business may employ significantly fewer people, this means that according to their data, in the United States alone there are over 30 million small businesses, providing up to 47.5% of the country’s workforce.

Small business owners are responsible for almost half of the jobs in the United States. One way business is able to protect itself and consequently those jobs, they turn to life insurance. According to these same statistics, “in the third quarter of 2016, 749,000 jobs were lost due to small business closings,” or businesses failing.

Don’t let your loyal employees, or your hard-earned company, fail due to untimely death. Explore purchasing a whole life insurance policy. Grow your wealth, as well as, guarantee the future of your business, the livelihood of your employees, and the financial security of those who depend on you.

Speaking with an experienced insurance agent is the best method to learn about your options. A knowledgeable, trusted agent will know of reliable carriers who will prepare proposals without cost yo you.

Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.

Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC).  CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who make the investment in dollars, time and study to gain a unique level of expertise. 

Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies before renewal?  Call our office, 714-258-2800. Would you like to understand life insurance policy specifics better?  Call and ask for Peter. If you instead, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.

Trusted Choice Agency

Does Your Business Rely On Employees?

2019 September 11 by Peter Green Insurance

Congratulations, you are doomed!

Every man for himself, right? Wrong! In business, when you employ others, you are taking on more than just the responsibility of providing a salary in return for their service.  Employees rarely vocalize the fact directly; however, unconsciously and subliminally look to you for security and well-being. When you add unique benefits beyond ordinary compensation expectations, you send relevant messages to your “business” family. 

If you haven’t thought of or looked into these surprisingly affordable extra benefits, you should. When you take good care of your employees, they, in turn, take better care of you, your business, and your client base. Retention, performance, and loyalty are measurable improvements you will gain. 

Overwhelming, costly, hard to implement, and maintain?  Taking care of your employees is easier than you think.

The Happiness Factor.

According to Forbes.com, “employees who feel valued and appreciated by their leaders are infinitely more likely to go above and beyond for the company.”  On average, employees whose work is recognized are happier and therefore, more dedicated to both current and future projects. The most recent study by a respected carrier Annual US Employee Benefits Study 2019 found the happiest employees at work are more satisfied with their job, loyal, engaged, productive, and successful.

So how can you do it? Taking steps to show them you care has proven to be a worthwhile endeavor. Happier employees result in a more positive work environment for all leading in a better-run business.

 Take Care of Your Employees.

• Get to know them personally. Learn their hobbies, ask about their families, and be open to lending an ear, or even a shoulder, when they are going through tough times. While you may be their boss, it’s essential to show them you don’t see yourself as being “above” them. Leadership requires an active role, so don’t be afraid to get on their level, so to speak, and prove you’ve been in their shoes.
• Support and take them at their word. Showing your employees, you trust their judgment and acknowledge their experiences is the basis of mutual respect. If an employee has a problem with a client, or worse, an abusive client, don’t be afraid to back them up. While we often tout “the customer is always right,” there are times when the customer is just a jerk. Show your employees you have their back in these situations, whether it means severing ties with an annoying unprofitable client or just opening your door to the employee to vent.
• Set realistic expectations. Don’t set the bar to an unreasonable height. If you expect goals to be met that are impossible for most, you are essentially setting your employees, and business, up to fail. While it’s important to push your employees and yourself to tackle challenges, be sure to be reasonable.
• Be open to their help. An employee may have a creative solution for a problem that’s had you stymied, but you’ll never know if you don’t ask them. Just as you should encourage your employees to open up to you about their hurdles, don’t be afraid to approach them with business setbacks where appropriate. Crowdsourcing ideas can be both helpful and community-building activities.
• Take care of them. Beyond agreed to compensation, providing benefits is the number one step you can take to support your employees. More and more employers are adding group life insurance to their benefits package, and for a good reason. 

According to principal.com, more than 35% of households “feel a negative financial impact” within one month of the primary wage earner’s passing. Providing employees with a life insurance option not only gives them peace of mind but also protects their family from financial collapse should they pass.

Families that lose their principal earner, not only have to cover funeral costs and any final arrangements, but also have to make up for lost wages while continuing to offset daily expenses and prepare for long-term financial commitments like children’s schooling costs.

By providing life insurance, you are ensuring your employees’ families don’t suffer losses in addition to the loss of their loved ones.

Providing group life insurance as a part of your benefits package protects your employees, but it also can help you attract and retain employees. Individuals conducting the job search are often most interested in a position’s benefits. By providing life insurance, you may be securing more applications from prospective candidates.

Considered Group Life Insurance.

Some employers, especially small business owners, believe that offering life insurance to employees is the opposite of a budget-friendly move, and they couldn’t be more wrong. “About sixty percent of all people in the United States were covered by some type of life insurance,” according to LIMRA’s 2018 Insurance Barometer Study. Group life insurance accounts for approximately 25% of people’s coverage, while individual policies cover only 28% million. There are several ways to ensure affordability when it comes to taking care of your employees, including but not limited to:

• The amount you pay for the policy. You can cover all, some, or none of the premium. Many employers choose to share the costs of the premium with their employees.
• The type of policy you offer. Permanent vs. term life insurance. Typically, group policies are term life insurance, which costs less.
• The type of additional benefits offered. Offerings benefits to your employees, such as health, dental, or vision insurance, may be quite low for the value you are adding. 

In the end, an independent agency with an experienced adviser will provide you with an insurance carrier that can offer you a variety of choices. They may be able to create a customized policy for your particular budget and goals. 

Remember, many insurance policies have the potential to reduce your overall taxes and have a significant bearing on your employee’s future and how they value your company. People don’t leave jobs  – they leave management. Being in the position of affecting the lives of your employees and taking positive steps to keep them and their families in mind goes a long way in ensuring loyalty as well as, you are motivating employees to do their best, every time, every day. 

Work with a benefits agency that values you and your business. Questions? Peter Green Insurance Agency  LLC has answers and solutions. Let us get you — and your employees — the benefits to enhance their financial security. We’ll help you navigate the various options for group life insurance and narrow them down to what works best for you and your business.

Trusted Choice Agency

Executive Bonus Plan: Is Your Business Is Missing The Boat

2019 September 9 by Peter Green Insurance

What Is An Executive Bonus Plan?

An Executive Bonus Plan, which is also known as a “Section 162 Bonus Plan,” is an arrangement in which a business pays the premium on a life insurance policy owned by the key employee as a “bonus” to that employee. If the amount of this bonus is considered a “reasonable compensation,” then the total is deductible as a business expense.

Executive Bonus Plans are often used by companies that recognize that they would experience a significant loss in productivity, profit, or community ethos if they were to lose one of their workers to premature or unexpected death.

Considering a sudden loss of a uniquely valuable employee is troublesome. Realizing the emotional consequences and financial impact on your business is essential. What would happen? How much income would be at risk? Would you lose a special certification or expertise required by your customers? How long would it take to replace that person with someone with similar qualifications, contacts, and experiences? Once found, what is the cost to incentivize someone to jump ship and leave their current company?

If you have worker(s) who would create a void within your business, you likely have a “key employee,” who will be protected by a Section 162 Bonus Plan. The beneficiary would receive the life insurance payout should essential worker(s) pass away.

How To Set Up An Executive Bonus Plan:

There are two phases to the set-up process for these plans.

Phase One: Decision Making

Before you can set up the plan, you need to determine which valuable employee(s) who are going to be in the bonus plan. The amount called the “targeted death benefit,”

must be determined, the bonus or monetary value of the policy each covered employee will receive.

There can be different levels for different employees. Importantly, you don’t have to insure everyone at the same level. The appropriate level for your company and the standard for each level of worker(s) is variable providing you with considerable flexibility.

Phase Two: Make Agreements with Employees

During this phase, the business creates an agreement for each “key employee,” chosen for the plan. As the employer, this agreement obligates you to pay the annual premium of the life insurance policy (in the form of a bonus). You will continue to pay this amount for as long as the person remains employed with the firm.

Some important things to know include:

• The critical employee(s) retains ownership rights of the policy.
• These rights allow the employee to name the beneficiary and access the policy’s cash value.

Understand The Tax Implications:

The employer tax implications need to be recognized when choosing this bonus
plan insurance policy for the key employee(s).

You have two options to consider.

Option One: Treat the premium as a single bonus.

If you choose this option, your business will treat the premiums as a bonus. That means it will part of the taxable compensation for the employee(s) designated in the plan. The employee then pays the income tax on the “bonus” compensation.

Option Two: Treat the premium as a double bonus.

This option provides a more substantial bonus amount to assist the employee in covering the additional out of pocket costs associated with the insurance policy. In this instance, the company is covering both the policy premiums and taxes — this eliminates any expense on the part of the employee.

By choosing option 2, realize that the total amount of the bonus is tax-deductible to your business, as long as it’s justified (established) as reasonable compensation.

What Are The Benefits To This Type Of Policy?

In our experience, companies that aren’t using Executive Bonus Plans to their advantage are missing the boat. They are losing out on some crucial leverages and protections.

Think about the difficulty your company would face if you had to deal with the tragic loss of one of your top executives or employees. In addition to the tremendous personal loss you would feel from the emotional impact of such a tragedy, you would also find yourself dealing with the professional aftermath.

Taking out an insurance policy to protect you in the event of this kind of loss is such an idea worthy of serious consideration. Protecting you from financial impact is not the only reason to consider taking out an Executive Bonus Plan. Gain from the protection and significant benefits for the employees themselves.

Benefits For The Business

First, the tax benefits of providing this bonus is a reduction in tax liability. When properly implemented, The Section 162 Bonus Plan is a tax-deductible expense.

Second, the employee(s) bonused realize you recognize their extraordinary value and contribution to the business. The individual(s) are self-motivated, happy, and feel secure about their position. These individuals are cheerleaders within the firm. They remain loyal. Their positive attitude and presence speak loudly to their peers. Since you chose the employee(s) impacted by the plans, you are intentionally indicating whom you regard as excellent workers and company leaders.

Lastly, since the company (you) is paying an insurance policy premium on them, the policy is free. Who doesn’t like free, especially something so significant? An unexpected, jaw-dropping benefit that sells itself, no matching contribution. Realize how their loved ones feel, how supportive and secure everyone becomes. They learn what the employee(s) have known; the company is an excellent place to work – a benefit becomes a morale booster at work and home.

Benefits For The Insured Worker

What about the employee? Do they benefit as much as you do, as the employer? We believe that yes, there are significant benefits to your key employees.

1. The designee(s) chosen for the bonus plan owns the life insurance policy.
2. Because the policy belongs to the employee(s, the beneficiary is their choice.
3. The cash within the policy can provide savings for retirement or supplemental income.
4. As a tax-free death benefit, the policy terms are customizable with riders to address specific concerns, such as illness, disability, longterm care.

The flexibility within these plans is something that all businesses need to explore. Although most individuals think in terms of death when you speak about life insurance, business owners have choices far beyond.

What Does All Of This Mean For You As An Employer?

If you are an employer who would suffer if you lost key workers, you should investigate an Executive Bonus Plan. This life insurance strategy is a consideration for playing a significant role in long-term planning. Chat with an insurance agent about the many business owner’s policies available in the insurance market. There are policies for all sizes of business. 

Speaking with an experienced insurance agent is the best method to learn about your options. A knowledgeable, trusted agent will know of reliable carriers who will prepare proposals.

Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.

Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC).  CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who make the investment in sweat equity, time and study to gain a unique level of expertise.

Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies before renewal?  Call our office, 714-258-2800. Would you like to understand disability insurance policy specifics?  Call and ask for Peter. If you rather, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.

A Trusted Choice Agency

How To Increase The Cash Value Of Your Business And Reduce Your Taxes Via Insurance

2019 September 6 by Peter Green Insurance

The average person may think of life insurance in terms of its most basic usage: coverage for death. Many may believe life insurance isn’t necessary until you reach a certain age, get married, or have a family. Some may think it’s a luxury but not a necessity. However, many people are ill-informed when it comes to life insurance and all of the benefits it provides.

For instance, according to one study, up to 80% of people overestimate the cost of maintaining a life insurance policy. Alternatively, 64% of people don’t purchase life insurance because they believe it is too expensive or that they cannot afford it.

While a recent study shows that 84% of Americans believe that “most people” do need life insurance, only 68% think they can benefit from it. Moreover, an even lower percentage of people–59%–state that they own a life insurance policy.

However, life insurance is can be more than death insurance,  life insurance can build cash for any use. 

The beauty of life insurance is that some plans–particularly permanent life insurance plans–offer the policyholder so much more than death benefits, such as increasing cash value and tax benefits.

For small business owners, this added advantage can be the difference between just barely keeping your head above water in the competitive market and making waves in your respective sector.

So how do you take advantage of it? First, you’ll want to take out a permanent life insurance policy. Permanent life insurance comes in several different forms, each with its unique benefits.

The most common forms of permanent life insurance and those most often purchased by business owners are whole life insurance, variable life insurance, and universal life insurance. Here’s a breakdown of what each of these offers:

Whole Life Insurance

• Fixed premiums
• Guaranteed death benefit
• Cash Value component
• Opportunities to end dividends (with participating policies)

Variable Life Insurance

• Variable death benefit
• Investment account options

Universal Life Insurance

• Flexible premiums
• Option to guarantee a death benefit
• Cash Value component

Both whole life insurance and universal life insurance offer cash value components to their plans, meaning that in addition to the death benefit your beneficiaries would receive on your passing, you also grow your savings and accumulate wealth while living.

The Insurance Information Institute indicates that whole life insurance policies are the most commonly purchased policy. Whole life policies last for your entire life, as long as your premiums get paid when due. Another feature is the fixed premium. A fixed premium means that even as you age, you don’t need to worry about increases in your monthly cost.

Universal life insurance policies provide more flexibility, with the ability to alter your premium payments; however, paying less than the target premium or missing payments can be a detriment to the cash value. Besides, because of variable interest rates, the cash value growth could be lower than with a whole life policy.

Why Cash Value is Necessary for Your Business

The benefits of an insurance policy’s cash value are numerous, both on the personal and the professional level. For your individual needs, the ability to grow savings and borrow against a policy–all the while ensuring your loved ones have the security they need should something happen–are priceless. Also, for your business, the benefits are just as rewarding.

Increase in Financial Stability

One of the essential elements of a successful business is maintaining future funding. Permanent life insurance policies, with their guaranteed cash value accumulation, help to provide a steady wealth stream for your business.

Besides, taking out life insurance policies on key people in your business can help to assure your clients, partners, and creditors that your business will have the stability needed moving forward if something were to happen to any key individuals, such as yourself or a partner.

Reduce Taxes

Because the cash value of a life insurance policy grows tax-free, many businesses rely on permanent life insurance to help provide funding for day-to-day operations and long-term growth. Who doesn’t love a tax-free way to increase their income?

Manage Cash Flow

Any company, no matter its size or profile, can run the risk of something financially incapacitating happening, from a product recall to a national economic downturn. Having liquidity from a life insurance policy can help revitalize your cash flow in times of trouble.

Provide Employee Benefits

Attracting and maintaining top-notch employees is often the number one priority (and sometimes a struggle) of small business owners. Having accessible and growing cash value can allow you to provide your employees with a more significant benefits package, thereby helping you to retain them.

Funding Your Business with Preferred Rates
and No Income Qualification

Another benefit of whole life insurance’s ability to provide you cash value is that it allows you to “borrow from” and not “borrow against” yourself. This policy will enable you to borrow from this money at any time without having to demonstrate your income, prove your creditworthiness, or justify your need for cash; additionally, you get a terrific interest rate.

You may wonder why you would need any interest rate at all to “borrow” your own money, but the cash value from an insurance policy acts as collateral in the same way that a car or a home function as collateral for car loans or mortgages.

Often referred to as “infinite banking,” this means that with a whole life insurance policy, you can take out a loan for your business without any explanations needed or questions asked, and frequently at a much better rate than you might be able to get elsewhere.

Moreover, while you are expected to pay back the loan with interest, there isn’t a set monthly rate; as long as you pay it back before it exceeds the value of your policy, you have flexibility in payments. Additionally, the IRS doesn’t recognize the loan as income, which means it isn’t taxed.

What if the insurance company’s interest rate is still too high? Some recommend using your life insurance policy as collateral at a bank when taking out a loan, with the possibility of a net gain if your interest rate is lower than or equal to the rate at which your policy’s cash value is growing.

If you chose to go this route and happened to pass away before paying back the loan, your beneficiaries would receive the death benefit laking the remaining loan balance.

Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.

Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC).  CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who wish to advance their insurance knowledge with specialized classes. The investment in days and study time to gain a level of expertise rarely found in insurance agents. 

Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies before renewal?  Call our office, 714-258-2800. Would you like to understand life insurance policy specifics?  Call and ask for Peter. If you rather, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.  

A Trusted Choice Agency

Tax Implications Of Group Disability Insurance

2019 September 4 by Peter Green Insurance

We recently explored several of the reasons why employers benefit from providing group disability insurance to their employees. Here’s a brief run-down of the top 5 reasons:

• Offering disability insurance is an ethically responsible employment decision.

• Improves morale and retention of workers, both of which lead to higher profits.

• Protects you from having to make difficult and legally complicated employment decisions about sick or injured workers.

• Attract recruit better employees when you offer more benefits.

• Multiple options to make disability insurance work. Surprisingly less cost than you may believe.

Let’s say that you have decided to start offering group disability insurance to your employees. That is great news! Next, you need to consider the tax implications of providing such coverage.

What Are Employee Tax Implications?

Disability insurance is used by employees who find themselves unable to work due to illness or injury that is unrelated to their employment. (Employment injuries and illnesses go through worker’s compensation insurance, which is a different topic altogether.)

Before they take advantage of disability insurance, people are going to want to know whether or not the income they draw is taxable. Will they be taxed from the money they take home during their time of short term or long term disability? Or will that income be tax-free?

The answer is not exactly straightforward. Sometimes disability insurance income may be taxable, while other times, it isn’t.

The deciding factors include:

• What kind of benefits you are using (short term disability, long term disability, worker’s compensation, group disability, individual disability, etc.)
• Who paid the premiums (you, your employer, or a combination of the two)
• The pre-tax or after-tax status of the premium payments

When Is Disability Income Tax-free?

Some people choose to pay for their disability insurance through individual policies, using their after-tax income to pay the premiums, then the income is tax-free. Premiums for disability insurance are not deductible from one’s taxes as a medical expense, so it is crucial to keep that in mind when deciding on an individual policy.

What about when disability insurance provided through an employee’s group policy? In that case, the benefits are tax-free, assuming the employee pays 100% of the premium with their after-tax income.

If the employer and employee split the premiums, then the tax benefit is also divided. The employee will pay taxes on the portion of the benefits that correlate to the part of the premium they paid with after-tax dollars.

Finally, if the employer pays the full premium, then the employee will be taxed on the disability income benefits they receive.

Do You Know The Tax Implications for Employers?

What does all of this mean for employers? To start, it means that business owners should be aware of how their decisions about disability insurance can affect their workers. You may also have some questions about what taxes you will be responsible for, regardless of whether or not you have workers who utilize their policies.

Remember these key takeaways:

• If you pay the premiums, your employees will pay taxes on their disability income.
• If your employee pays the premiums with after-tax dollars, the income is tax-free.
• If you split the premiums, you will each pay a portion of the taxes.
• If you provide a mechanism for employees to pay their premiums with pre-tax dollars, their disability income is taxable.

It comes down to whether or not the money used for the premiums was previously taxed, regardless of whether the employer or employee has paid that tax. If the premiums paid with after-tax dollars, the benefits are tax-free – And if paid with pre-tax dollars, the benefit will be taxed.

There are other arrangements, too, that could impact what workers owe. Obtain information from an experienced disability insurance expert. Importantly, your insurance advisor looks at all the different regulations that may impact your decision as well as available payment options.

What Are “key person” Plans?

You may have also heard about another kind of tax-free disability income called Key Person Insurance. In these situations, an employer takes out a disability policy on behalf of one or more irreplaceable employees or executives called “key person.” In an instance when a key person is unable to work for a predefined period, the company suffers significant setbacks and wants compensation for project delays, profit loss, and other issues caused by a person’s absence.

Companies choose to do this when they experience a significant burden if an employee or executive is unable to work due to illness, injury, or disability. It isn’t a particularly common kind of insurance, but it is something that some businesses choose to carry on one or more of their employees.

In this situation, because the employer is paying the premium, and because the premium is not deductible as a medical expense, the employer doesn’t pay taxes on any received benefits.

Are You Providing Good Disability Coverage?

Time to evaluate what you are offering to your workers regarding disability protection. Whether your looking to provide coverage for the very first time or have provided disability insurance coverage for some time,  you should learn of what’s available, new or changing.  When you are ready to have the qualified agents at Peter Green Insurance Agency (PGIA)look over your current plans and help you find ways to save money and improve employee morale, you’ll be pleased with the results after speaking with us. Call 714-258-2800 or 888-725-7776.

We know of the best group disability plans and tax implications of each disability policy offered!

A Trusted Choice Agency

What Can You Do When Your Worker Can’t Work?

2019 August 28 by Peter Green Insurance

The Council for Disability Awareness (CDA) has identified a significant problem for American workers: a lack of access to adequate disability insurance. 

The CDA stated, “The absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers has created a critical blind spot for many American workers and their families,” the CDA continued, “Without some income protection, more Americans are experiencing severe financial difficulty if they need to miss work due to illness, injury, or pregnancy.”

They go on to talk about the problems workers face when they find themselves temporarily or permanently disabled. An inability to work can cause immediate financial stress and long-term damages. Because most working Americans don’t have enough savings to cover more than three months without a paycheck (see page 26 of this federal report).

How Many Workers Have Disability Coverage?

The Bureau of Labor Statistics provides some pretty impressive data about disability coverage, comparing 2008 to 2018.

Their examination shows that in 2008, 39% of private industry employees had access to short term disability coverage and that only increased to 42% by 2018. Long term disability access in the private sector was 32% in 2008 and just about the same in 2018 at 34%. 

Fewer federal and state employers offer short term disability than private employers, with the number at 23% in 2008 and 26% in 2018. However, federal and state workers are more likely than their private-sector peers to have access to long term disability. In 2008, long term disability access for public employees was at 35%, and that number increased to 38% in 2018.

These numbers reveal a stark reality: millions of Americans are working without protections against things like disability, pregnancy, and injury.

CDA says, “A 2014 study of consumer bankruptcy filings identified the following as primary reasons: medical bills (26%), lost job (20%), illness or injury on the part of self or family member (15%).”

What Is A Group Disability Policy?

Group disability is a safety net for workers. In this plan, an employer provides a group insurance policy that covers all eligible and enrolled employees as members. Employers can buy policies for short term coverage, long term coverage, or both.

There are several ways to cover the premiums. Some employers include the full cost of the premiums, while others split the premiums between themselves and their employees.

Still, other companies provide disability insurance that is funded entirely by employees paying the premiums. (Need advice figuring out how to choose the right premium coverage strategy? Talk to us at Peter Green Insurance!

What Does Short Term Disability Cover?

Short term disability (STD) provides benefits for less than 26 weeks to eligible employees who are temporarily disabled. If a worker can’t perform the responsibilities of their job for a short time, they will likely utilize short term disability coverage.

Short term disability covers things like recovery after childbirth or surgery or dealing with an illness that lasts for several weeks or months.

What Does Long Term Disability Cover?

In contrast, long term disability (LTD) can far exceed 26 weeks. Some companies limit long term disability to a specific number of years (4 or 5 years is a typical term), but in general, LTD provides coverage until the employee returns to the job.

LTD usually begins after short term coverage is utilized. Workers who face a longer recovery after an injury, suffer a mental health condition, deal with chronic illness, or fighting cancer are likely to utilize long term disability.

How Is This Different From Worker’s Compensation Insurance?

Worker’s compensation covers medical costs and missed income when a worker is injured on the job or becomes sick because of the work environment. Disability insurance, however, covers injuries and illnesses entirely unrelated to the workplace.

The main focus of disability insurance is on what happens when a person is unable to physically work anymore because of their health or disability circumstances.

Why Should Employers Offer Disability Coverage?

The first group of people usually identified as beneficiaries of disability coverage is, of course, injured or disabled workers. You will learn about the risks of becoming disabled and how difficult it can be to maintain financial security after such a life change when you learn and understand the benefits of disability coverage.

CDA says that the odds of experiencing a period of disability in your life are pretty high. They state that 30-year-old men who work jobs that require physical labor face some pretty steep chances of becoming disabled.

The risk is almost one-in-two of experiencing a disability before 65. Even someone in a job that is not as physically dangerous can still become disabled.

The CDA says that a 20-year-old woman in an office job still has a one-in-five chance of becoming disabled before reaching the typical retirement age of 65.

But even if it looks like employees are the only ones who benefit from disability insurance, that isn’t the case. There are several reasons why employers should offer short and long term disability to their workers.

1. Taking care of your employees improves morale and retention. It’s not just about morality. It’s also about building a company culture where your whole team feels valued and secure.

2. Employers want to take care of their workers when they are hurt or sick because it is a morally sound thing to do. Providing disability insurance is an ethical decision.

3. Disability insurance prevents you from having to make difficult decisions about whether or not to continue employing a worker who is unable to work through no fault of their own.

4. Providing great benefits is one of the best ways to recruit excellent workers who could go anywhere. You want to hire the best candidates, and providing excellent benefits is a way to attract those top tier applicants.

5. Disability plans are often less expensive than you would expect, and we can almost always find a plan that meets your budget.

6. When an injured or disabled worker has good coverage, they can focus on getting better instead of stressing about their finances. Then they can get back to work, which is where they want to be!

What Should Business Owners Do About Disability Insurance?

Are you currently providing short term or long term disability coverage to your employees? Is the coverage adequate? Are your workers satisfied with what you are providing? Are the costs within your budget?

If you’re not currently providing this kind of coverage, when are you going to start? How much is it going to cost, and how do you know which plan is the right one for your company?

Speaking with an experienced insurance agent is the best method to learn about your options. A knowledgeable trusted agent will know of reliable carriers who will prepare proposals. Talk to us about Disability Insurance! We look forward to hearing from you. We can assist you in providing DI and other benefits to your workers!

Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.

Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC).  CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who make the investment in dollars, time and study to gain a unique level of expertise. 

Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies prior to renewal?  Call our office, 714-258-2800. Would you like to better understand disability insurance policy specifics?  Call and ask for Peter. If you rather, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.  

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How To Estimate The Cost Of Group Disability Insurance

2019 August 28 by Peter Green Insurance

Estimating The Cost Of Group Disability Insurance

Being partially or permanently disabled something people don’t often think about: the possibility of being disabled and unable to work. However, it is essential to think about such things, even if it is unpleasant if only to be prepared should an incident happen.

For instance, a Social Security Administration’s report shows that “one of every four 20-year-olds will become physically challenged before retiring.”

While this does not mean that each of these individuals will become permanently unable to work, the truth is that some will never reenter the workforce, or will have to change careers–and perhaps take a salary cut– to compensate for physical challenges faced.

Again, it is not always pleasant to consider, but as a business owner, you have even more responsibility to think about such things, both for yourself and your employees. The best thing you can do for your business and those who work for you is to offer the benefit of group disability insurance.

What is Group Disability Insurance and Who Needs It? 

Disability Insurance (DI) should not be confused with Workers’ Compensation Insurance. Most states mandate Workers’ Compensation Insurance requiring employers with employees to have the coverage. An essential benefit to employees, particularly if your business involves physical, hazardous, or extreme work conditions.

While worker’s compensation insurance only covers injuries that occur on the job or “employment-related,” disability insurance covers illness or injury that occurs off the job.

Group disability insurance is explicitly a benefit that an employer can offer their employees. It can be provided in both short-term and long-term plans and covers all eligible employees no matter their health conditions.

The number of employees to whom an employer can offer this benefit is unlimited. DI coverage provides security should you, or your employees face an illness or job-hindering accident. Also, group disability insurance offers several advantages over individual policies, such as:

• More affordable premiums as group rates tend to be lower.
• Plan flexibility that allows you to build a plan based on your budget and your employees.’
• Flexibility for premium payments. Plans can allow you, your employee, or a combination thereof to cover premium payments.

Are All Policies The Same?

There is two basic policies – short and long term. Both short-term and long-term disability insurance covers an employee’s monthly salary up to a specific dollar amount. There are options to chose from within the policies as well. An example, the long-term may offer supplemental aid to help individuals return to work, such as training. Here is a more thorough breakdown of their offerings:

Short-term Disability Insurance

• Generally will replace up to 60-70% of the insured’s base salary.
• Depending on the policy details, generally pays for a period of a few months to a year.
• May include a waiting period between the time one becomes disabled and when benefits start paying.

Long-term Disability Insurance

• In general, it will replace up to 40-60% of the insured’s base salary.
• When the individual’s disability ends, the benefits end. May stipulate a certain number of years or benefits may last until retirement age.
• Typically has a waiting period before paid benefits start.

Also, some employers choose to offer additional coverage, or employees may want to take out an individual supplemental policy.

What Are The Costs?

While group disability insurance may seem priceless should it ever be claimed and benefits received, it is of interest to business owners to estimate the cost of offering this invaluable benefit. Because benefits are usually offered up to a fixed maximum determined by the plan, you may use an employee’s monthly salary to estimate premium cost.

Another way to estimate is to take the average cost of disability insurance into account, setting it at 1-3% of an employee’s annual gross income. An employee earning $150,000 a year can then reasonably expect to pay at a minimum of $1,500 annually on premiums.

When considering the benefits–such as protecting you and your family from income loss due to injury and its consequences–this price seems reasonable. The cost of insurance depends on the characteristics of the plan. Speaking with an experienced insurance agent is the best method to learn about your options. A knowledgeable trusted agent will know of reliable carriers who will prepare proposals.

Since 2010, Peter Green Insurance Agency LLC (PGIA) has provided businesses and individuals with “Asset Protection and Financial Security”™ by selectively using insurance coverages as a hedge against inherent financial risks.

Peter W. Green is the managing member of PGIA and a Certified Insurance Counselor (CIC).  CIC is an internationally recognized designation awarded by The National Alliance for Insurance Education and Research to those who make the investment in dollars, time and study to gain a unique level of expertise. 

Need answers to an insurance question? Have a specific insurance concern? Would you like a review of your policies prior to renewal?  Call our office, 714-258-2800. Would you like to better understand disability insurance policy specifics?  Call and ask for Peter. If you rather, contact Peter by email. Our agency offers a unique level of customer service rarely found today. Let’s talk.

Planning for the future of your business-Exit Strategy

2019 August 14 by Peter Green Insurance

What Is Your Exit Strategy?

You’ve made it through your first few years, your business seems to be booming, new clients are coming in and you have a good sense for what works and what doesn’t.

Now you can relax, right? Wrong. There is still a lot of uncertainty, a lot of risks, and a lot of rewards, which unfortunately for you as a business owner, means a lot to be restless over.

It’s often quoted that 20% of small businesses fail in their first year. While that’s terrible for them, that still means 80% succeed, right? But businesses aren’t built for one year, and a whopping 70% of small businesses fail in their 10th year, if not before.

And not just small businesses fail, either. Seeming goliath companies like the iconic Blockbuster Video, Toys R Us, Kodak, and Polaroid, all reached a point in which they were failing to innovate and adapt, resulting in bankruptcy, closure, or buy out.

Be determined. Make success the only path. So, what causes failure?  

What Causes a Business to Fail?

CB Insights, a tech market intelligence platform, put together the results of 101 startup failures and broke down the reasons, according to their owners, for their demise. Here are the top ten cited results:

• 42% specified a lack of market for their products/services
• 29% ran out of funds
• 23% had problems with their team
• 19% claimed they were outcompeted
• 18% faced pricing issues
• 17% failed to have a user-friendly product
• 17% did not follow a business model
• 14% made poor marketing choices
• 14% admitted to ignoring customers
• 13% believe their product rollout was poorly timed

Additionally, other owners found that they lost focus, passion for their business, or simply suffered burnout. 

Surveys show that while the national average is 33.8 hours of work each week, 33% of small business owners are logging more than 50 hours per week, with 25% logging more than 60 hours. And at weekends? 70% of those surveyed note they work at least one weekend regularly.

Devoting so much time to your business is all the more reason to protect your interests. Inc.com cites Rhonda F. Waters, president of Mutare Group, as stating that “the small-business owners who are happiest begin with an end in mind.”

What is your end goal? How long do you plan to stay in the game? Are you prepared to adapt to the changing landscape in your sector? Do you have an exit strategy should you need one? Have you prepared yourself–and your business–for life’s surprises?

While none of the above-stated issues are completely unavoidable, and there is a lot you can do as a business owner and entrepreneur to learn from other owners’ mistakes, there are additional ways you can be more effective in starting and running a business.

According to Steve Hogan of TechRx, businesses without co-founders are those that are most likely to fail, so one step you can take is to find a trustworthy co-owner to help you run your company.

Entrepreneur.com notes some of the most critical steps to take in forming a workable partnership, such as being able to recognize your strengths and weaknesses as well as your partner’s, being honest about where you see the company and yourself down the road, maintaining open, respectful communication, and putting things in writing.

However, starting a business with one or more partners offers its own set of challenges, even if you succeed. For instance, what happens if one of you leaves the company? How do you protect your interests in a situation outside of your control, such as untimely death or disability?

Smart Partners Plan

If you or a partner leaves your company, it’s smart to have a plan in place. Buy-sell agreements, also known as buy-out agreements, allow you to manage what could otherwise be unmanageable in the loss of a business partner.

Having such an agreement safeguards your situation from all angles, such as ensuring that only those you and your partner have agreed upon could take control of business interests, that each of your shares is fairly evaluated, and that the business as a whole can maintain its trajectory.

While many believe that a buy-out agreement only covers you if your partner passes or retires, they can also cover several other tricky situations, such as divorce, personal bankruptcy, losing your business licensure, and even termination for cause (though hopefully, if you follow the above tips for healthy partnerships, this would never be a problem).

While there are many ways to work out a buy-sell agreement, a whole life insurance buy-sell agreement, in particular, provides a solid exit strategy and substantial protection. Here’s how it works:

1. A whole life insurance policy is purchased for each business owner. Whole life insurance is a form of permanent life insurance, so the policy will cover each owner for life, with no need to worry about term limits. 

2. Premiums are paid on each policy, and each policy will also build cash value as a savings portion of the policy. This cash value offers a “living benefit” to the policyholder, serving as equity. 

3. In the case of an owner’s death, the proceeds from the policy will be used by the living owner to purchase the deceased’s portion of the company from their estate. 

4. In the case of an owner retiring, becoming ill, or leaving due to a disability, their policy is reassigned to the remaining owner(s).

Take the Next Step

Is it time for you to take the next step with your business? Be prepared for the future and the myriad challenges that will come your way. In establishing a business buy-sell agreement, you are protecting the interests of the partners, their families, and the business’s future. Whole life insurance offers monetary flexibility. A whole life policy is a proven method of chose for funding an agreement.  

Recognize that choosing a whole life insurance policy is an investment with significant unique qualities. A qualified independent insurance agent will help you analyze insurance carriers, guide you through the purchasing process, and assist in securing a policy that works well with your budget. Get started on tomorrow, by making a call today.

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