Selling life insurance to businesses can be lucrative.
But there are some things you need to be aware of to make sure they don’t eventually face tax issues in the future.
Thanks to laws that went into effect back in 2006, a simple oversight could end up costing your business client – and that’s not good for them or for you.
Watch the video and learn about some of the pitfalls you can face when selling life insurance to businesses.
Keep reading after the video for more information.
Selling life insurance to business owners
Have you ever sold an employer-owned life insurance policy?
If the answer is “yes,” consider the following: Imagine getting a call from one of your business clients indicating that they received a letter from the IRS that the policy proceeds recently paid to their business on the life of one of their employees is taxable.
That's the sort of phone call that you never want to get.
What I just described to you can happen under current pension law and IRS code. Since August of 2006, regulations state that if a business owns life insurance on an employee and proper notice and consent was not executed prior to the policy being issued, future policy death benefits could become taxable to the business.
That's not going to make your clients happy, and my bet is that they're going to point the finger and say that the proper advice was not given to them. When the policy was sold – whether or not you sold the policy or someone else did – now is the time for you to open up that discussion and create opportunities.
We have a fix and we'd like to tell you about it if you have business-owner clients with life insurance, either in a buy-sell arrangement or a key person arrangement.
Give Leisure Werden & Terry a call so that we can help you avoid the potential landmines that exist when selling life insurance to businesses.