Fact Finding Uncovers LTC Case and More


When, Executive Benefits Network, President, Joe B. Jones first met with a community bank prospect, he did not see the opportunity for an open case. The joint work partner was interested in placing bank owned life insurance, but it was quickly evident that they did not have capacity to add more BOLI at that time. Nonetheless, Joe followed his fact finding process, and he discovered something startling about the executive retirement plan – it was not likely to meet the retirement needs of the executives. What’s more, it was expensive and poorly invested.


As Joe continued fact finding, he discovered that the existing executive benefit plan was detrimental to both the employer and the executives at retirement. The expensive plan ($280,000/year) was based on 3 separate bank owned policies, with premiums invested in low rated, heavy-expense variable universal life. The low performing investment had not broken even, despite the strong market environment. At retirement, when the policies were scheduled to be distributed out, the executives would need to take out large loans in order to pay taxes. This would severely limit the policies’ ability to generate an income stream in retirement, which was the expectation of the employer and the executives.

What’s more, the plan failed to meet diversification needs of the executives, who already had exposure to the equity markets, but no real source of guaranteed income in retirement. Joe went to work on a different approach, to balance out the assets in the executive’s retirement package – 401(k) savings and their stock portfolios. He recommended a Defined Benefit SERP for guaranteed income and a company paid LTC Plan to safeguard against a catastrophic health event. His approach gave the executives known income streams and an additional pool of cash to offset a long term care event, while achieving a 25% savings over their old plan design.


The client was surprised by the issues Joe uncovered in their existing plan, and grateful for Joe’s expertise in developing a meaningful solution. The CFO had first-hand emotion experience with a loved one experiencing a long-term care event, and understood the value of the LTC coverage. Before signing off on the plan each of the three executives brought in their advisors to review Joe’s plan, and all three approved. In addition to adding the guaranteed income stream to their retirement package, Joe’s plan provided LTC coverage to the 3 executives and 2 spouses. The plan maxed out the benefit period at 6 years, and the benefit at $6,000/month, with the premiums to be paid in perpetuity by the employer. Because of their experience in this case with Joe, the client has been proactive in introducing Joe to their board of directors, all of whom own businesses in the area.


The client was busy running the bank and had trusted a national firm that was working in their area. The CEO was uncomfortable with the fact that the investment allocation hadn’t performed and that the reports coming from the firm didn’t match up with the reports from the insurance carriers. He remembered Joe and called him.

Trust your instincts but verify.

For more information on this idea, please contact a consultant at Executive Benefits Network.