Bonus Plans 4 1/2 Ways Trying on the Solution National Life Insurance Company | Life Insurance Company of the Southwest National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW), Addison, TX and their affiliates. Each company of NL Group is solely responsible for its own financial condition and contractual obligations. LSW is not an authorized insurer in New York and does not conduct insurance business in New York. No bank or credit union guarantee | Not a deposit | Not FDIC/NCUA insured | May lose value | Not insured by any federal or state government agency This information is not intended as tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor. 2015 National Life Group TC86519(0815)3 Executive Bonus using Permanent Life Insurance
1 Income tax free death benefit1 2 Potential for retirement income through tax free loans and withdrawals2 3 Optional Accelerated benefits riders available that allow you to Access the death benefit in the event of a qualifying terminal, chronic, critical illness or critical injury3 4
Minimal personal out of pocket cost 5 Many variations possible 1. IRC Section 101(a)(1). There are some exceptions to this rule. Please consult a qualified tax professional for advice concerning your individual situation. 2. Policy loans and withdrawals reduce the policys cash value and death benefit and may result in taxable event. Withdrawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender. Surrender changes may reduce the policys cash value in early years. 3. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you. Riders are supplemental benefits that can be added to a life insurance policy and are not suitable unless you also have a need for life insurance. Riders are optional, may require additional 2premium and
2015 Life Group may National not be available in all states or on all products. This is not a solicitation of any specific insurance policy. Bonus 4 Ways Single Bonus Key Advantage Bonus 3 2015 National Life Group
Double Bonus ? Key Advantage With Deferred Bonus Single Bonus 4 Single Bonus IRS
BONUS THE PREMIUM BUSINESS OWNER Business Tax Deductible Executive Pay the tax out of pocket 5 2015 National Life Group Advantages
Business Deductible Selective participation Simple, no IRS filings No set up costs 6 2015 National Life Group Executive Income tax free death benefit Access to all policy benefits Personal cost equals tax
due on the bonus Double Bonus 7 Double Bonus CASH IRS BONUS THE PREMIUM BUSINESS OWNER
Business Makes cash bonus to cover all the personal tax due Executive 8 No additional out of pocket cost 2015 National Life Group Advantages Business Deductible Selective participation Simple, no IRS filings No set up costs
9 2015 National Life Group Executive Income tax free death benefit Access to all policy benefits No additional out of pocket costs Key Advantage Bonus Plan 10 Single Bonus Plan
IRS BONUS THE PREMIUM BUSINESS 11 2015 National Life Group OWNER Key Advantage Single Bonus BONUS THE
PREMIUM BUSINESS OWNER IRS CASH Use policy cash value via loan to pay tax on income1 12 Policy loans and withdrawals reduce the policys cash value and death benefit and may result in a taxable event. 2015 National
Life Group Surrender charges may reduce the policys cash value in early years. Advantages Business Deductible Selective participation Simple, no IRS filings No set up costs 13 2015 National Life Group
Executive Income tax free death benefit Access to all policy benefits Potential to use policy cash values to pay tax Key Advantage Bonus Plan with a Deferred Bonus Arrangement 14 Key Advantage Single Bonus BONUS THE PREMIUM
BUSINESS OWNER CASH 15 2015 National Life Group IRS Key Advantage Bonus with Deferred Bonus DEFERRED BONUS
BONUS THE PREMIUM BUSINESS OWNER CASH Receive deferred bonus at retirement 16 2015 National Life Group IRS Advantages Business
Deductible Selective participation Strong golden handcuff Executive Income tax free death benefit Access to all policy benefits May receive additional benefits at retirement 17 2015 National Life Group
And the ? 18 Add Restrictive Endorsement Single Bonus Key Advantage Bonus 19 2015 National Life Group Double
Bonus Key Advantage With Deferred Bonus Which is the Right Choice? 20 For the Owner Executive 1 Where corporate tax rate is higher than personal tax rate. 2
Where business owner desires to use business check book. 21 2015 National Life Group For the Non Owner Executive 1 Single where no strong golden handcuff is needed 2 Double for a very valued employee 3
Key Advantage - where single bonus is used and key executive is a decision maker 4 Key Advantage With Deferred Bonus looking for long term commitment 22 2015 National Life Group Information needed 23 1
Type of business entity C Corporation or Pass Thru? 2 Who is receiving the benefit? 3 Business tax bracket and Participant tax bracket. 4 When should the arrangement terminate? 5
What is desired after the arrangement terminates? 6 How will the executive pay their costs? 2015 National Life Group
