Premier Financial Group

ANNUITIES
A contract between an insurance company and an individual. All money invested accumulates tax deferred. Retirement income is usually the objective of most annuity plans. Withdrawals prior to age 59½ may be subject to a 10% tax penalty.

BONDS
Are known as debt instruments to the company that issued them. The issuing company promises to repay the principal of a loan to bond investors. For taking on this debt, interest payments, are paid to the owner semiannually.

BUY-SELL AGREEMENT
A contractual agreement between shareholders and their corporation or between a shareholder and the other shareholders of the corporation. The contract controls what happens to the business or the company stock in the event of death to the primary owner.

BUSINESS SUCCESSION PLANNING
Few people have more estate planning issues to deal with than the family business owner. The business may be the most valuable asset in the owner's estate. Yet, two out of three family owned businesses don't survive the first generation due to poor planning. Following are three concerns all small business owners should address as they plan their estates. Who will take over the business if you die? Who should inherit your business? How will the IRS value your company?

CORPORATE OWNED LIFE INSURANCE (COLI)
Under a COLI program, an employer purchases life insurance on individuals for whom it has an "insurable interest." In many cases, the insured are the participants in the non-qualified plan being financed, but this is not always the case. While an employer cannot deduct the premiums it pays under a COLI program, cash values within the policies generally accumulate tax free. Furthermore, if an employer holds the policies until the death of the insured, it receives the death benefit proceeds on a tax-free basis. Alternatively, because policies provide some liquidity through loans and partial surrenders, an employer can use existing policies to meet short-term plan cash flow needs. An employer may simply hold COLI as a corporate asset, or may assign ownership of the policies to a rabbi or secular trust. In any event, policy cash values are assets that appear in the corporate financial statements.

CDs
A deposit of funds in a financial institution that permits the holder to receive interest plus the deposit when it matures.

CHARITABLE REMAINDER TRUST
A trust that provides an income to another individual for a certain period of time , then the remainder is left to a designated charity. Since you are making a partial charitable donation at the time of your death, your estate receives a deduction for a portion of the trust's value. Government tables determine the size of the estate tax deduction based upon the value of the assets in the trust. The term of the trust and the income to be paid to the beneficiary.

CFP
Certified Financial Planner.

ChFC
Chartered Financial Consultant.

CLU
Chartered Life Underwriter.

DEFERRED COMPENSATION PLANS
An agreement between a firm and an employee by which the employee agrees to defer receiving current earned income until it is received at retirement.

DIRECTORS AND OFFICERS INSURANCE
A type of Professional Liability insurance which provides coverage for directors and officers of a corporation who commit "wrongful" acts such as error, neglect or breach of duty.

DISABILITY INSURANCE
Personal income protection if you are unable to work due to sickness or injury. Monthly disability benefit will be paid to cover a fraction (60%) of your income.

ESTATE TAX-REDUCTION STRATEGIES
Do you need to worry about estate taxes? The answer depends on how much your estate is worth. A tax on the estate of the deceased before any distribution is made to the heirs. An unlimited amount of property can pass to a surviving spouse at death. A federal unified gift provides an exemption, of $650,000 for 1999, before any tax is paid. The federal estate tax begins at 37%. There are several ways to reduce your tax burden: Life Insurance Trust, Family Limited Partnership, and Charitable Remainder trust.

ESOP- EMPLOYEE STOCK OWNERSHIP PLAN
A qualified plan that invests in stock of the employer company. With an ESOP you can:

Sell - privately held stock
Obtain - (tax-deductible) working capital
Create corporate ownership

FAMILY LIMITED PARTNERSHIP
The family limited partnership is a standard limited partnership comprised solely of family members. It is through this arrangement, however, that the family can protect its accumulated wealth and pass it on to future generations. It operates like a trust to ensures continuous succession of property ownership and control from one generation to the next while sheltering family assets and financial resources from waste, estate taxation, and creditors.

FLMI
Fellow, Life Management Institute.

xx
xx

HEALTH INSURANCE
Provides financial compensation to the owner of the plan. It covers doctor and hospital visits. There are three types: Major medical, Indemnity, and HMO packages. HMO packages include Blue Cross, Keystone, Aetna U.S. Healthcare. In 1997 we have the start of the Medical Savings Accounts offering major medical coverage with savings. If the savings account is used for medical reasons it can be withdrawn tax free.

INDIVIDUAL RETIREMENT ACCOUNT (IRA)
Anyone can establish a IRA. This is a retirement account that is funded through after-tax dollars and all income grows tax deferred until withdrawn. A deductible IRA allows a deduction from income to reduce your current tax burden. Deductions are based on your income level. New changes allow you to contribute to an IRA even if you or your spouse has another retirement plan. Pension & Profit Sharing Plans These are qualified retirement plans that allow plan participants to set aside money for retirement. There are many types of Pension and Profit sharing plans that can meet the needs and situations of each individual company. The many benefits are: Tax deferred growth, funded with pre-tax dollars, and money contributed are deductible for employers.

INDEX ANNUITIES
A single premium or flexible deferred annuity. It is a retirement plan that offers you many advantages such as: interest credited reflects a percentage of any S&P 500 Index increases, protection of principal and interest credited. All increases in your account are locked in every year, you can never lose interest once it has been credited.

xx
xx

LIFE INSURANCE
Provides financial compensation to the contract owner’s beneficiaries in the event of the contract owners death. Group life insurance coverage can be cost effective and easy to establish.

LIFE INSURANCE TRUST
A Life Insurance trust is simply an arrangement in which one person (the trustee) holds legal title to an asset contributed by another person (the grantor) and manages it for the benefit of the third person (the beneficiary). Under this arrangement, the grantor makes contributions to the trust which in turn pays the life insurance premiums.

MUTUAL FUNDS*
An investment company that continually offers new share and stands ready to redeem existing shares from the owners. There are many different types of funds and many are sold in fund families.
*General Securities Disclosure
Securities and Investment advisory services are offered through registered representatives of NFP Securities, Inc. 1250 Capital of Texas Hwy S., #2-600, Austin TX 78746 Tel 877-880-0040 Fax 512-329-0971 NASD/SIPC.

Follow-up, individualized responses to persons by NFP Securities, Inc. involving the rendering of personalized investment advice or effecting or attempt to effect securities transactions, will not be made absent compliance with state registration requirements. NFP Securities, Inc. cannot respond to securities or investment advisory related information requested by persons in Hawaii.

MOTOR VEHICLE INSURANCE
This insurance provides a few types of coverage. The liability section provides coverage for negligent acts stemming from the ownership, maintenance or use of an insured vehicle. This insurance pays for bodily injury and/ or property damage to a third party. The property section protects an insured from collision losses and losses other than collision (e.g. theft, fire, falling objects).

MBA
Master of Business Administration.

MSFS
Master of Science in Financial Services.

NON QUALIFIED 401K
The same benefits as a qualified 401K plan, except it is funded with after tax dollars.

xx
xx

PENSION & PROFIT SHARING PLANS
401K Plan- A defined contribution retirement plan that permits an employee to set aside a portion of pre-tax salary in a tax-deferred investment account chosen by the employer. Maximum contribution is $10,000 (for 1998) a year.

PROFESSIONAL LIABILITY
This type of insurance protects a professional who fails to meet the standards of skill and care generally accepted for his profession or occupation, and which causes bodily injury or damage to a client.

PROPERTY COVERAGE
This insurance makes payment to an insured in the event that certain properties are destroyed or damaged by the perils named (e.g. fire, lightning, theft, etc.) A few examples of property insured are homes, business buildings and computers.

xx
xx

RABBI TRUSTS
The trust pays out nonqualified plan benefits when they become due. A nonqualified plan associated with a properly structured rabbi trust is considered unfunded for ERISA and tax purposes. The employer is still responsible for taxes on investment gains and on trust assets.

REVERSE SPLIT DOLLAR
Ownership of cash value and death benefit are different than the regular split-dollar. In this plan the employee owns all the equity and the employer owns the death benefit.

ROTH IRA
Individual’s are allowed to make a after-tax contribution up to $2000 depending on their gross income. The principal and growth are received tax free after 5 years and/or age 59½.

SECTION 125 PLAN
An IRS Code that allows employees to contribute pre-tax income to their flexible spending account to pay health and child care expenses.

SEP
This an easy to establish and administer retirement plan. Employers with 25 or fewer employees can contribute from 0% to 15% (maximum $24,000) of the employee’s salary to the SEP-IRA each year.

SEVERANCE TRUST EXECUTIVE PLANS
Under a STEP plan employer contributions are used to purchase life insurance policies, which are used to fund severance benefits and life insurance protection for participants. A benefits from a STEP plan by offering current tax deduction, selective participation, tax deferred growth, and it is a great recruiting tool.

SIMPLE PLAN
Employers with 100 or fewer employees.

STOCKS
An ownership share in a corporation. Depending on type it may have voting rights and have a residual claim to assets of a corporation.

SPLIT DOLLAR
A non-qualified employee benefit plan in which two parties, the employer and the employee, agree to share the costs and benefits of a permanent life insurance policy. In this plan the employee owns the death benefit and the employer owns all the cash value. Split-dollar allows the employer to build employee loyalty to the business by providing assistance in the purchase of needed life insurance.

xx
xx

WORKERS COMPENSATION
This type of insurance provides compensation for employee injuries and covers an employer’s liability for common law suits brought by employees to recover damages for job-related injuries.

xx
xx

401K PLANS
A defined contribution retirement plan that permits an employee to set aside a portion of pre-tax salary in a tax-deferred investment account chosen by the employer.

403(b)
A retirement plan that permits an employee of a nonprofit organization to contribute a portion of income into a tax-sheltered fund. Benefits of the plan are: contributions to the plan reduce current taxable income in the year they are contributed, taxes on interest income are deferred, and contributions and growth are fully taxable when withdrawals are made at retirement.

457 PLANS
The IRS allows an exclusion from gross income for a portion of salary deferred by a participant in a state or local government. These rules also apply to employees participating in plans of tax-exempt organizations (excluding churches), and to independent contractors (e.g., physicians providing independent services to hospitals are not included in the participant's gross income until the year such amounts are paid or otherwise made available to the employee.

xx
xx