444 Liberty Ave. Suite 750
Pittsburgh, PA 15222-1207

Phone: (412) 497-1750
Fax: (412) 338-0241

GATEWAY FINANCIAL IS MOVING! Please note that as of 7/24/2017, our new office location will be:
Four PPG Place Sixth Floor Pittsburgh, PA 15222

Success Stories



Executive Split Dollar Rescue Program

Background

Problem

Solution

  • Fortune 500 Company
  • International
  • Split Dollar Life Insurance Plan
  • 250+ Participants, Ages 60 to 77
  • Health Status of Participants ranged from Standard to Uninsurable

Poorly drafted split dollar agreement together with poor performing life insurance policies issued over 20 years ago caused projected corporate and participant plan costs to more than double.  In addition, more recent split dollar tax law changes and compliance requirements triggered complex and time-consuming communication and administration issues.

Replaced the split dollar arrangement with an Executive Bonus approach of providing the promised participant death benefits.  Replaced all existing poor-performing policies with conservatively-funded individual policies issued on a “guaranteed issue” basis.  Eliminated on-going administration and compliance issues.  Saved the Company over $200,000 and eliminated participant costs of over $700,000.



Informal Funding of a Supplemental Executive Retirement Plan

Background

Problem

Solution

  • Large, Publicly-Owned Company
  • Personal Service Industry
  • National Geographic Location
  • Supplemental Executive Retirement Plan
  • 134 Plan Participants
  • Health Status of Participants ranged from Standard to Uninsurable

Company informally funded its supplemental executive retirement plan (SERP) using a managed portfolio consisting of 60% equities and 40% bonds.  Due to the portfolio’s turnover rate and favorable investment returns, the company was incurring income taxes on plan assets in excess of $1.2 million per year.

Transferred the SERP’s assets to a variable life insurance portfolio insuring the plan participants.  All life insurance policies were issued on a guaranteed-issue basis.  Cash values were invested in separate accounts with the same 60%/ 40% asset allocation.  Income taxes on the plan’s asset growth were eliminated due to the favorable tax nature of life insurance.  Policy death benefits provided the company with funds to partially cost-recover its contributions.



Supplemental Long Term Disability Plan

Background

Problem

Solution

  • National Law Firm
  • Group LTD provided 60% of Comp to $30k
  • 321 Partner-Participants
  • Health Status of Parners ranged from Standard to Uninsurable

Due to an automobile accident and subsequent disability claims by two of the firm’s highly-paid partners, the firm’s long term disability renewal rate increased by over 90% (a $104,000/month increase).

 

Stabilized the cost of the Group LTD plan and mitigated future rate increases by reducing the Group LTD monthly benefit cap from $30,000 to $15,000, (thereby decreasing the maximum claim by 100%) and replacing the Group LTD coverage with individual disability policies with guaranteed rates.  The cost in the first three years of the restructured plan was the same as the prior all-group plan; however, the restructured plan generated a savings of over $1.2 million in the subsequent five-year period.



Funding a Business Continuity Agreement

Background

Problem

Solution

  • Regional Law Firm
  • C Corporation
  • 93 Shareholders
  • Shareholder Health Status ranged from Standard to Uninsurable

The firm’s business continuity agreement called for the buyout of each shareholder’s stock and receivables within six months following his or her pre-retirement death.  The minimum buyout price for each shareholder was $500,000.  A buyout using the firm’s cash flow would cause a financial strain, especially in the event of the death of two or more shareholders within a couple of years.  A few of the shareholders were uninsurable.  No insurance carriers were willing to offer term insurance on a guaranteed-issue basis.

Partially funded the firm’s business continuity agreement by placing a $500,000 firm-owned institutionally-priced universal life insurance policy on each shareholder’s life.  All policies were issued on a guaranteed-standard-issue basis.  To further minimize the firm’s premium-outlay, the premiums for the universal life policies were structured to resemble those of term insurance and cash value build-up was kept to a minimum.  Upon a shareholder’s termination or retirement, when the firm’s need for the life insurance policy no longer exists, the shareholder is given the option to take over the policy on a personal basis.