A Strategic Approach to Retaining Key Employees
Attracting talented new employees and retaining key employees is crucial to the ongoing success of any company. An 162 executive bonus plan using life insurance can provide a simple, yet powerful, retention and recruitment incentive to top performers and can provide life and/or disability income insurance to key executives using tax deductible dollars.
How It Works
- 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. The employee may have access to policy cash values, if any, 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.
Advantages
- The death benefit is potentially tax free, and the cash growth in the policy is tax deferred.
- Since the employee owns the policy, they can take the policy with them if employment is terminated.
- Employee names the beneficiary on the policy.
- Unless the bonus plan is restricted, the key employee can have immediate access to the cash value in the policy without income tax by using loans or withdrawals, or the cash value in the policy can be used to supplement income at retirement.
Why CBIZ Life Insurance Solutions?
When you work with CBIZ Life Insurance Solutions you have the support of a strategic partner backed by national resources. Our services ensure your key employees always receive personalized policies.