Non-Qualified Plan Options

Executive Bonus - allows you to provide personally owned life insurance as a tax-deductible fringe benefit for yourself and select key employees of your business. Premiums paid for the policy are generally deductible to the business and taxable to the employee as compensation. An additional amount (called a "double bonus") may be paid to the employee to cover the tax liability associated with the bonus.

Split-Dollar - an arrangement between you (or an employee) and the company to share in the purchase of permanent insurance. The premiums are paid by the company and are not currently deductible. However, the company can recoup its costs by receiving a portion of the life insurance proceeds or a payment of its interest in the plan from the employee at a future date. It is an effective way to provide life insurance to the party who needs it by the party who can afford it.

Deferred Compensation - an arrangement under which you agree to provide the employee with a benefit at a future date. While your business cannot take a deduction until the benefits are actually paid, you or your employee do not recognize taxable income until the benefit is received.

Section 79 - a group term life insurance program typically offering $50,000 of group term coverage to employees and additional permanent benefits to owners and select employees. Employer contributions are generally deductible and employees are not taxed on the first $50,000 of coverage. Contributions for permanent benefits are also deductible to the employer and 60-65% of the cost of coverage is taxable to the employee.