Page 311 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Chapter 6. Employee Benefits and Perquisites 297

TE Benefit Importance to Executive
E C Low Moderate High

Life Insurance
5 B • Ordinary
1 B • Term
5 B • Variable universal life
5 B • Endowment
• Company owned
1 D – Key person
* D – Split dollar
* B – Retired lives reserve
Other Insurance
1 B • Survivor benefit
1 B • Accidental death
1 B • Business travel accident
1 B • Kidnap and ransom
* * • Supplemental life
1 B • Carve-out life
1 B • Combination term and permanent
1 B • Dependent life

Design Considerations
1 B • Premium Waiver
1 B • Conversion
1 B • Assignment
1 B • Living benefit
1 B • After retirement
Totals
4 16 0
EB 0 0 0
P 0 0 0

* Depends on coverage
Table 6-19. Survivor protection summary

ensure a pension is ready when the employee retires, but the employee has no income tax
liability until actually receiving these payments. Nor are earnings or invested funds taxable
to either the company or the employee. To receive qualified-plan status, Section 401 of the
IRC stipulates that the plan cannot discriminate in favor of highly compensated employees.
To meet this requirement, the plan must be nondiscriminatory in (1) benefits or plan con-
tributions, (2) rights and plan features, and (3) plan changes. Plans that do not meet this
requirement are called nonqualified, or nonstatutory, plans. Tax deductions for nonqualified