Executive Bonus plan
An Executive Bonus plan using life insurance can provide a simple yet powerful retention and recruitment incentive to top performers. Another advantage is the business may be able to take a current tax deduction for the bonus paid in the executive bonus plan.
Your business pays a tax-deductible bonus* to fund premiums for a life insurance policy owned personally by the employee.
Your employee designates a beneficiary for the death benefit and may have access to policy cash values, if any. The employee may have access to policy cash values on a tax-favored basis to address personal needs such as supplemental retirement income.
Your employee pays income tax on the bonus received.
At death, your employee’s beneficiary receives the death benefit proceeds, generally income tax-free.
- The business has discretion regarding which employees can participate.
- The plan is easy to implement and maintain.
- The business receives an immediate tax deduction for the bonus paid.*
- The employee owns the policy, has control of the cash value, and names the beneficiary.
- Tax-advantaged income may be available from the policy through partial withdrawals and loans.*
- Cash values accumulate tax-deferred.
- Death benefit proceeds are generally received income-tax free.
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