lifetime income
non-qualified solutions

the power of
LINQS+

A proprietary innovation to the traditional SERP product.

 

With Lifetime Income Non-Qualified Solution (LINQS+), the financial institution purchases an insurance company guarantee to make the lifetime benefit payments. The Insurance Company takes the longevity, investment, and interest rate risk. The financial institution carries the asset as an investment on the balance sheet and earns interest at the current market rates.

This proprietary innovation to the traditional supplemental executive retirement plan (SERP) combines the best of a traditional SERP with a mechanism to enhance executive retention and reduce the cost of the benefits for the financial institution.

EXAMPLE:

  • An executive is to receive $100K annually for 15 years under a traditional SERP; the cost of the plan is $1,500,000 (100K x 15).
  • With LINQS+, an investment of $800K will provide a GUARANTEED lifetime benefit stream of the same $100K annually.
  • The financial impact is a positive savings of $700K for the financial institution, and the executive receives an enhanced LIFETIME benefit, which would equal $2,100,000 based on expected mortality.
Picture of a stack of ledger books denoting fiscal responsibility while attracting and retaining key employees.

HOW IS THIS DIFFERENT FROM BOLI?

LINQS+ is NOT life insurance. However, if properly structured, LINQS+ and BOLI are a complement to each other. BOLI policies provide earnings to offset the cost of the benefit plans and protect against premature death through the insurance aspect of the policy.

LINQS+ protects executives, and financial institutions, from longevity risk. As described above, LINQS+ actually reduces the cost of the benefits with the actual design specifically addressing the liability expense.

 

LINQS+ Commonly Asked Questions

The insurance company makes payments to the financial institution, who is the owner of the annuity. Then the financial institution uses these payments to pay the participant their LINQS+ benefits.

The genesis of LINQS+ resulted from two things: Executives living longer, and The Great Recession. LINQS+ addresses increasing life expectancy by guaranteeing a lifetime benefit, and it address investment risk by guaranteeing the amount of the benefit. The guarantees are provided through a fixed annuity.

The financial institution purchases a fixed annuity from an insurance company, that guarantees to provide a benefit stream. According to GAAP the financial institution is allowed to expense the cost of providing the guarantee, which is the cost of the annuity, and not the actual cost of the benefit payments.

  • Less expensive
  • Lifetime Benefit – you cannot outlive this benefit
  • Guaranteed payment, not contingent upon investment performance

Upon approval, it is typically less than 30 days.

First and foremost, the participant’s value to the institution is realized. In addition, the participant now has a lifetime benefit that is guaranteed, and will not have to worry about outliving their retirement.