Executive Carve Out Using LTC CASH™

An Executive Carve Out plan can be used when a business decides to reward a specific group of executives by purchasing for each member in the group, a LTC insurance policy. The executive or key employees are usually those who are key to the success of the business. By using an accelerated pay option such as a “ten pay,” the business can project the cost of this special benefit and determine when the premium payments will stop. When the executive retires the business can present him or her with a paid up LTC insurance policy.

Whether the policy is limited pay or a continuous pay LTC insurance policy, there are many advantages to this plan:

• The executive is the owner of the policy which is fully portable.
• The business can deduct the cost of the premiums using pretax dollars, just like health insurance.
• The business can purchase an optional Return of Premium Rider
• The total premium paid by the business is not included in the executive’s taxable income (unless the executive has an ownership interest in a pass-through business entity like a partnership, S corporation, LLC, etc.).
• Benefits under a tax-qualified LTC insurance policy are paid to the executive tax free.

Disclaimer: The discussion of legal and tax considerations in this material is an interpretation of current law and is not intended as legal or tax advice. You should consult your legal and tax professionals.