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Purchasing life insurance within a qualified plan may offer business owners a practical and tax-efficient way to fund personal life insurance protection. Columbus Life created a new Qualified Plan Life Sales producer guide designed to help you assist your clients.
Practical. For some small business owners, most of their financial resources are tied up in their business. They may not have access to sufficient personal funds outside of the business to purchase needed life insurance protection.
Tax-efficient. Within limits, qualified plan contributions are deductible. They are deductible by C corporations and by passthrough entities, i.e., sole proprietorships, partnerships, limited liability companies and S corporations. Purchasing life insurance within a qualified plan allows premiums to be paid with pre-tax dollars.
Life insurance protection. A life insurance policy offers immediate death benefit protection for an insured’s family. If structured correctly, it can possibly provide supplemental tax-free retirement income. In addition, it can function as a distinct asset class, one that is not exposed to the same market risk as other investments often found in a retirement portfolio.
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