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Human Resources · Executive Bonus Plans

Reward The People

Who Drive Your Business

Your best people are hard to replace. An executive bonus plan lets you reward and retain key employees with employer-funded life insurance they own, a simple, selective benefit that says “we’re invested in you” without the complexity of a full retirement plan.

How it works

A Simple, Powerful Reward

In an executive bonus plan, often called a Section 162 plan, your business pays a bonus that funds a permanent life insurance policy owned by a key employee. The employer typically deducts the bonus as compensation, the employee owns the policy including its cash value and death benefit, and you choose exactly who participates. It’s one of the most straightforward ways to offer a meaningful, selective benefit.

Why it works

A Win For Both Sides

Retain Key Talent

Give your most valuable people a reason to stay, and a benefit they’ll notice.

Simple to Run

Far less complex and costly to administer than a qualified retirement plan.

Fully Selective

Unlike group plans, you decide who participates and at what level.

Tax-advantaged

The bonus is generally tax-deductible to the business as compensation.

Cash Value For Them

The executive’s policy builds cash value they can use down the road.

Death Benefit Protection

Their family is protected with life insurance coverage, too.

Retention

Add Golden Handcuffs

Want to tie the reward to loyalty? A restrictive bonus arrangement adds a vesting schedule, so the executive gains full access to the policy’s value only after staying a set number of years. It turns a generous perk into a powerful retention tool, a benefit they don’t want to walk away from.

 

Informational only, not legal or tax advice. We recommend confirming the tax treatment with your accountant before setting up a plan.

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Reward Your Key People

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