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StateFarm Canada is now Desjardins Insurance

State Farm® Canada is now Desjardins Insurance and your local State Farm Agent will now be known as your Desjardins Agent.

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Reward the employees you depend on with a deferred compensation plan

Desjardins Insurance’s employee incentive programs provide small business owners with the opportunity to give back to their employees.

For more information, contact your Desjardins Agent.

The split dollar plan

The split dollar plan is an incentive program whereby the employer and the employee appropriate life insurance for the employee. The employer and employee may share the premium payments, or the employer may pay the entire life insurance premium on the employee's life.

For the employer, the plan may provide:

  • An incentive for the employee to stay with the employer.
  • A way to reward certain key employees.
  • A source of liquidity for the business through the coverage’s cash values, if the employer is the policyholder.

For the employee, the plan can provide:

  • Future insurability for life insurance.

The executive bonus plan

The executive bonus plan provides a way for an employer to help a key employee meet personal life insurance needs. The employer pays the premium on a life insurance coverage owned by the key employee.

Although the business pays for the premium directly or indirectly through a salary bonus, the employee purchases, owns and controls the coverage.

For the employer, the plan may:

  • Help retain key employees.
  • Allow the employer to reward certain key employees.

For the employee, the plan may provide:

  • Needed personal life insurance.
  • Future insurability.

Deferred compensation plan

The deferred compensation plan is a contractual arrangement whereby a key employee, usually in a high-income tax bracket, will receive a guaranteed number of fixed payments, upon retirement, in place of current salary increases or cash bonuses.

For the employer, the plan may:

  • Help retain a key employee.
  • Attract a top employee.
  • Provide a means to reward specific employees.

For the employee, the plan may:

  • Allow them to remain in a lower income tax bracket.
  • Provide supplementary funds upon retirement.
  • Provide their family with financial support in the event of death.

In the deferred compensation contract, prepared by a lawyer, the employer may agree to:

  • Pay the employee a specified salary over a specific number of years upon retirement.
  • Continue payments to the employee's beneficiary if the retired employee dies before receiving the full number of payments.
  • Pay a death benefit to the employee's beneficiary in the event of death prior to retirement.

The employee usually agrees to:

  • Remain with the employer until retirement.
  • Refrain from competing with the employer after retirement.

Cash value life insurance provides a means to provide the cash needed for a deferred compensation plan. The policy's cash value can provide needed funding for required payments when the employee retires, and the death benefit can be used if payments are to the employee's beneficiary.

Neither Desjardins Insurance nor its agents provide tax or legal advice. Please consult your tax, legal or investment advisor regarding your specific circumstances.

Life insurance products are manufactured and issued by Desjardins Financial Security Life Assurance Company.

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