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What is an Executive Bonus (Section 162) Plan?

Definition -

An Executive Bonus Plan is a method of compensating selected key employees by paying
the premiums of a life insurance policy on the employee's life. An Executive Bonus Plan
is one of the easiest supplemental benefit plans to create. Often, it is also the best choice
for a business owner and/or key employee.

Also known as a Section 162 plan, an Executive Bonus approach allows an employer to
provide life insurance protection to selected employees in a way that may be tax-
deductible to the employer.

The employer may choose the employee or employees to be covered, and the amount of
insurance to be provided. The plan may be made available to both stockholder and non-

           stockholder employees.                                      ."

Benefits to the Employer:

·         Can reward key executives.

·         Selective participation is allowed (no discrimination rules).

·         Premium costs are tax-deductible.

·         Creation of plan is simple.

·         No Administration.

·         Amounts of coverage on various employees can differ.

·         Plan can be terminated without IRS approval or restrictions.

Benefits to Executive:

·         Executive owns the policy and the cash values. If he or she changes employers,
the policy is not lost.

·         Policy may offer the potential for tax-deferred cash value accumulation.

·         Accumulating cash values will help in emergencies, at retirement or for personal

·         The death benefit may be income tax free. See IRC Sec. 101(a)

·         The proceeds may be used for estate settlement costs.

We Help Make Implementing an Executive Bonus Plan Easier

Starting the process is as easy as picking up the phone and calling our office or clicking on the
button below and completing the online form. No sales pressure, no confusing insurance
language, no worrying about which company to select. We are an independent insurance agency
and have access to a wide variety of insurance companies. Let us help guide you and make the
process easier for you.


6965 South 69th East Ave Tulsa, OK 74133
P.O. Box 700420 Tulsa, Oklahoma 74170-0420