Back in 2007 I read a Remodelers Advantage article that is no longer on their website about using a Life Insurance policy “Golden Handcuffs” issued as a tool for employee retention. The original article I read about this didn’t specify that the Life Insurance policy had to be a Whole Life policy for this strategy to work because Term Life doesn’t accrue a cash value.
What happens is a company pays for a Whole Life Insurance Policy as a benefit to an important employee with lets say a five year vesting period after which the employee will own 50% of the cash value of the policy and after ten years they own the full 100% cash value of the policy.
That way if the employee leaves the employer who bought the policy before the vesting period kicks in the company can draw on the cash value of the policy to help pay for the search for a replacement.
What do ya’ think?
I found the original Remodelers Advantage article using the WayBack Machine Internet Archive and you an read it here:
The Wayback Machine – https://web.archive.org/web/20060320120024/http://www.remodelersadvantage.com/Free/Free_Articles/Management/golden%20handcuffs.htm