An Executive Bonus Plan, as permitted by Section 162 of the Internal Revenue Code, is an arrangement to provide supplemental income and/or death benefits for select key employees of a company.  The plan can be funded with a life insurance policy (either universal life or whole life) featuring cash values that is purchased for the selected employee.

The arrangement permits the employee to own the life insurance policy and designate the desired beneficiary.  The company pays the premium directly to the insurance carrier, and the premium is assigned as a bonus to the employee.  The cost to the employee is therefore the tax on the bonus (rather than the payment of the full premium), and the premium to the carrier is deductible to the employer.

For the employer, there are no IRS restrictions or approvals, there are no Government forms or reports, and there are no burdensome administrative processes.  The employer faces no mandatory eligibility and participation rules, and there are no required plan provisions.  The employer can select which employees to participate, and the program can be custom-tailored for each participant.

For the employee, there is a permanent insurance benefit that provides income-tax-free proceeds to the surviving family at death, and the cash values grow on a tax-deferred basis to provide additional income at retirement.


How can I get a Quote for an Executive Bonus Plan?

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