Life Insurance Coverage for Executives using a Section 162 Bonus Plan
For Executives, Supplemental Benefits have really become an essential component of rewarding their key employees. Using whole or term life insurance as incentive compensation is beneficial for the employer and the employee, and the Section 162 Executive Bonus Plan has a number of distinct advantages.
With this type of Section 162 Executive Bonus Plan the company pays the executive a bonus and the company executive can use the section 162 bonus plan to pay life insurance premiums into an annuity or life 
insurance policy that is owned 100% by the executive. The amount of insurance premium paid above the premium required by the life insurance coverage can be directed into a selection of products to build cash value. Section 162 Executive Bonus Plans do not impose any restrictions on the employee. Technically, while the company recommends the section 162 bonus be used for life insurance, ultimately, the employee chooses whether or not the bonus payment will be made to an annuity or to the life insurance program.
The Insurance Premiums are tax deductible under Section 162 of the IRS Tax Code to
the company. The company paid annuity or life insurance premium is considered taxable income to the company executive. The Life Insurance policy's cash value will grow tax deferred and the death benefit is tax free. After retirement, the insurance policy remains in force and there may be no further policy premiums are needed depending on what type of life insurance was purchased. This is why section 162 executive bonus plans are so popular. Please ask us for more information on a Section 162 Executive Bonus Plan.
For other types of Insurance Click Here