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Employee Matters Bulletin
831-661-5697 Website

ARE YOUR COMMUNICATIONS WITH EMPLOYEES TARGETED AND EFFECTIVE?

Bookmark and Share Modern communication methods have brought an overload of information. In this age, immense volumes of mail not only accumulate at the front door, it also accumulates in email in-boxes. The sheer volume alone leads us to delete spontaneously anything that isn't a bill, personal or business matter, or of other significant importance.

This creates an especially challenging situation for employers attempting to communicate benefit issues with their employees. It also means that employers need to develop benefit communication presentations that employees don't dismiss instantly and discard if they want to communicate benefit matters effectively. One way to do this is by considering your specific employees when developing communications. By identifying various employee groups, you can then work to target or customize the communications toward them.

It's important to first understand that topic interest is going to strongly vary from generation to generation, as each will have different current needs and goals for the future. The current work force consists mainly of three generations: Those born after 1980, Generation Y; those born from 1965 to 1980, Generation X; and those born before 1965, the Baby Boomer Generation.

Generation Y are those that are relatively young and still in the beginning stages of their career. This group isn't very likely to be contemplating their retirement or the importance of retirement savings. As most of us not in this generation can remember, the fallacies of youth might include a feeling of infallibility and an assumption that bad things only happen to others. So, this group might not pay much attention to health benefit information. This generation is accustomed to fast-paced media imagery and usually don't have very long attention spans. Therefore, this group is more likely to be receptive if the communication is concise and visually catching and received through electronic portals, such as email.

On the other hand, those in Generation X are at a much different point in their lives. Children, a mortgage, contributing to a child's college education, caring for an elderly parent, and contributions to a future retirement are all common financial responsibilities of this age group, and these responsibilities often compete with one another.

This group is usually established enough to know the importance of a retirement plan, but still might not be sufficiently contributing, if at all, due to balancing other financial obligations. Knowing what affects this group can be the perfect gateway to communication. For example, a retirement plan communication that has a budgeting tool as a highlight could serve to gain viewer attention. An EAP (Employee Assistance Program) with a resource and referral service to get elderly care and childcare services might also be something this group would find useful. So, EAP availability could be a highlight of a communication and gateway to discussing other benefits.

Baby Boomers are at the end of their careers and quickly nearing retirement. Many are scrambling to account for bad financial decisions or lapses in savings and preserve whatever they've managed to accumulate thus far. Age also brings an increasing concern about health care issues. Any communication that targets these issues is usually very well received by this generation. Many in this generation aren't very computer savvy and respond better to non-electronic communications.

The bottom line on targeted communications is quite simple: Whatever is interesting and applicable to us now is what we are most likely to read and pay attention to now. It only makes sense that effective communication is best achieved by knowing what's important and when it's important, and then developing and presenting communications accordingly.
Scurich Insurance Services 831-661-5697 Website
 

PROTECT YOUR COMPANY’S FINANCIAL FUTURE WITH KEY EMPLOYEE INSURANCE

Bookmark and Share You have a great group of employees working with you and your business is thriving. You know much of that success is due to one or two key individuals with both skills and personalities that would be difficult to replace. Imagine they were injured and out of work for a while, or even worse, suppose they died unexpectedly? Would your business survive? There are five separate groups that will be most concerned about the immediate financial health and future of the business in the event of the death or disability of an owner or key employee:
  • Employees will be concerned about the continuation of the business and their job security.
  • Creditors will be worried about the effect of the key employee’s death on the earning power of the business and its future ability to pay back any outstanding debts.
  • Suppliers will wonder about the potential loss of a customer.
  • Customers will be concerned about the ability of the business to continue providing its products and services, and will consider looking elsewhere to satisfy their needs.
  • Tax collectors will be concerned, but only to the extent that there are sufficient funds to pay the necessary taxes, even if it means the ultimate sacrifice of the business.

Key Employee Life and Disability insurance policies can help soften the impact of all of these.

Key Employee Life Insurance. Generally, your business purchases a Life insurance policy on a key employee, pays the premiums and is the beneficiary in the event of the employee’s death. As the owner of the policy, the business may surrender it, borrow against it and use either the cash value or death benefits as the business sees fit.

However, coming up with a dollar value on a key employee’s economic worth can be challenging. There are no specific rules or formulas to follow, but there are several guidelines that can help. The appropriate level of coverage might be the cost of recruiting and training an adequate replacement. On the other hand, the insurance amount might be the key employee’s annual salary times the number of years a newly hired replacement might take to reach a similar skill level. Finally, you might consider the key employee’s value in terms of company profits. The level of insurance coverage might then be tied to any anticipated profit or loss.

Premiums for key employee Life insurance are not a tax-deductible business expense for federal income tax purposes, since your business is the recipient of the benefits. For the most part, the death benefits your company receives as the beneficiary of the policy are not considered taxable income. However, if your business is a C corporation, the death benefits may increase the corporation’s liability for the alternative minimum tax. Consult a tax professional for information on your specific circumstances.

Key Employee Disability Insurance. The death of a key employee isn’t the only threat to your business. What if a key employee is injured or becomes ill and is out of work for an extended period of time? Disability insurance on such a key employee is another way you can protect your business against any resultant financial loss.

A crucial part of key employee Disability insurance policies is the definition of disability. Typically, these policies define disability as the inability of the employee to perform his or her normal job duties due to injury or illness. As with Life insurance, your business buys a Disability insurance policy on the employee, pays the premiums, and is named as the beneficiary. If the employee becomes disabled, the insurance coverage pays monthly disability benefits to your business. These benefits can equal a certain percentage of the key employee’s monthly salary, up to either a maximum monthly limit or 100% of their salary. The benefits may be used to pay the operating expenses of the business and to cover the expense of finding a temporary or permanent replacement for the key employee.

Disability policies typically offer elimination periods (i.e. the waiting period between the disability and when the benefits begin) ranging from 30 days to 365 days. Depending on the policy, your business may receive benefits for six to 18 months, which would be long enough to allow the key employee to return to work or for the company to replace the key employee.

Depending on the type of coverage purchased, the premiums you pay for the key employee Disability policy may or may not be a tax-deductible business expense. If the policy is considered business overhead expense insurance, then the premiums are a deductible expense. Although the business would be responsible for paying taxes on any disability benefits received, the business expenses the policy pays for indirectly would result in an offsetting deduction.

Planning ahead can help secure your company’s financial future by preventing a business from having to liquidate to raise cash. Key employee insurance can help assure families, employees, creditors, suppliers and customers that the future of the business is secure. By purchasing Life and Disability insurance on the owner(s) and/or key employees, the business is letting everyone know the financial condition of the business will remain sound despite the loss of a key person.
Scurich Insurance Services 831-661-5697 Website
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