Executive Bonuses (Life Insurance)

Reward your executives with tax-deductible bonuses

Executive bonus life insurance offers can help retain your key employees. The plans provide your employees life insurance at no cost to the employee. Best Life Insurance offers whole life and indexed universal life policies, so your employees’ policies will generate cash value over time that they can use for retirement.

Best Life Insurance offers multiple policy options and restrictions for executive bonus life insurance plans. Our agents work with you to personalize your policies so that they meet the needs of your business. From plans with built-in limitations or to a more free reign policy for your employees, Best Life Insurance has the best options for you.

How executive bonus life insurance works

Executive bonus plans are also called section 162 plans and are usually used as an employee incentive. Your company will pay the premiums for your key employee, but your employee will be the policyholder. In addition, executive bonus insurance policies offer whole life coverage.

Since the plans are permanent, your employee’s cash value and death benefits will increase over time. Offering your employees permanent life insurance gives employees peace of mind and a way to save for retirement.

As you’re insuring an employee, your premium costs will be based on your employee’s health and the desired coverage amount. Your employee chooses the amount of coverage, but you can limit the purchase amount to help keep your total costs within budget.

Bonuses that benefit you and your employees

Paying premiums for whole life insurance policies can seem like a losing situation for your small business. However, there are many pros for both you and your employee.

Business benefits

Enrolling in an executive bonus plan can help your business:

Retain your key employees

Section 162 bonus plans essentially create a free life insurance policy for your employees. Most executives are drawn to this offer, and if you set access limits, your employee won’t be able to access the cash until an appointed day or goal is achieved.

Encourage high performance

If you choose an indexed universal life plan, you can adjust your premiums based on how well your employee performs. For example, if they are not meeting goals, you can lower your premium payments.

Provide tax deductions

Your business can choose to deduct taxes on the premiums you pay for your bonus life insurance plans.

Easily administer bonuses

You may have to withdraw from stocks or other investments with traditional cash bonuses. An executive bonus life policy pays your top executives consistently without requiring you to pay through other funding.

Supplement an existing retirement plan

Although your employee may already have a retirement plan, providing a bonus policy will increase their retirement value.

Key employee benefits

Executive bonus life policies give employees:

Additional coverage

With a 162 Executive Bonus Plan, your employee will have increased death benefits. This offers your employees peace of mind because they know their family will be taken care of should they pass away.

Cash value

As your employee’s policy will be permanent, the cash value will increase each year. So, your employee will have access to cash if they choose to sell the policy.

In-place policy

Although the executive bonus life policies usually retain employees, the policy would stay with the employee if the employee should leave. However, your employee would need to pay the premiums if they leave the company.

Double bonus

The premiums your company pays are considered taxable income for the employee. However, you can choose to compensate your employees for the taxes, so your employee will not pay any taxes related to the policy at all.

Best Life offers a variety of Executive Bonus policies

At Best Life Insurance, we know finding the right executive bonus life insurance policy for your key employees can be a daunting task. That’s why we offer affordable policy choices and personalize restrictions for your policy. Our team will guide you through the process, and together, we’ll select the plan that’s right for your company.

Our primary categories for Section 162 Bonus policies include indexed universal and whole life insurance. These plans are very similar, but there are some key differences.

Choose stable premiums with a whole life insurance policy

Whole life insurance creates a permanent policy for your employees. The premiums your company pays won’t change over the years, and the cash value will steadily increase over time. If you’ve put restrictions in place, your employee will not be able to access all or some of the cash until the agreed time.

Your premiums will be based on the health and other lifestyle factors of your key employee. The fixed costs will be calculated when the policy originates. So, if your key employee is older or in poor health, the premiums will be higher.

Maintain flexibility with an indexed universal life policy

With an indexed universal life policy, you will be able to change your premium payments. This allows you more freedom for incentivizing your employee. If your key employee is not making goals, for example, you could choose to reduce the amount you pay.

Like whole life policies, indexed universal life policies will accumulate cash over time. However, keep in mind that universal life policies are tied to market conditions. So, it’s possible that if the market takes a tumble, your employee’s cash reserve may significantly decline.

Limit cash value access to ensure loyalty

At Best Life Insurance, our clients often ask how an executive bonus life policy would retain an employee if their employee has access to the cash. We understand your concern, so you can rest assured that we offer ways to encourage your employee’s loyalty to the company.

With executive bonus life insurance policies, you can choose when your employee will have access to the cash value. This can be a pre-determined date, such as retirement. Another option is to restrict access until your employee meets specific goals, often called key performance indicators (KPI).

Call Best Life Insurance for personalized plans

Best Life Insurance has over 15 years of collective experience in the Industry. We know the best way to help our clients is to first listen to their goals and needs. Our team will personalize your executive bonus policy to ensure the benefits you offer your top employees benefit you, too.

Give our agents a call today and discover the best way to drive employee loyalty through one of our executive bonus life policies.

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