Tax Efficiencies of an Executive Bonus Plan Using Whole Life Insurance
Small business owners looking for tax deductions and insurance benefits may be interested in an Executive Double Bonus Plan funded with MassMutual’s Whole Life 10 Pay.
his allows the deduction of the premium paid to the business, while providing a tax‑free death benefit, tax‑deferred cash value growth, and tax‑advantaged distributions during retirement1.
In our case study, see how a $100,000 annual premium can provide a client and his spouse a $1.3 million initial death benefit and a policy that is paid up at age 60, providing a source of supplemental income during retirement.
1Distributions under the policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty. Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.