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TAXES – Deduct, Leverage & Save

Infographic 8 - Taxes - Deduct, Leverage, Save

We believe an excellent way to viably tax deduct a buy sell agreement is through a profit sharing or defined benefit pension plan. On the surface, these plans appear complex, but when broken down are quite straightforward.

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Leverage and Options

Man-JugglingMy mother was more concerned about teaching me common sense than wondering if I would have a college degree. Why? Because she could measure common sense. So, when we were kids, if someone said “lend me a quarter and I will pay you back a dollar next week”, you loaned the money and this was how you learned the concept of leverage using common sense.

According to Webster’s college dictionary, one of the definitions of leverage is “the use of a small initial investment to gain a relatively high return.”  In even simpler terms, leverage is being able to get something on sale; to purchase two for one, to get a tax deduction, to turn a small premium into a large death benefit or, as is the case in Massachusetts, to not pay sales tax for one entire weekend on purchases up to $2500.


Smart business owners with an understanding of leverage start pension plans. The tax deduction associated with business pension plans leverages what they save for retirement by discounting the cost of saving. If you put away a dollar and it costs you 70 cents, you can see the leverage associated with these plans.

Additionally, when we buy life insurance, we effectively buy dollars  for pennies. My $250,000 life insurance policy has a $3000 annual  premium. For every 12 cents I spend, I am promised a dollar.

One can achieve even more leverage with a life insurance policy that combines long term care insurance into one premium, one policy two catastrophic events strategically managed. The cost is a 15%-20%  higher premium.

To offset the cost of LTC in a life policy, you can get annual discounts for a healthy  livingJigsaw lifestyle and the discounts range from 7%-20% – in many cases, equal to or greater than the additional  premium of a long term care benefit to a life insurance policy. In other words,  life insurance + healthy living = life insurance + LTC benefits at no additional cost
because  we are leveraging the premium down with discounts.

By planning with insurance leveraging concepts, you are re-monetizing your existing clients with strategic advice while expanding your planning platform. The adviser practice of the 21st century will need an expanded planning platform and we will address this in our upcoming series of posts.