An executive bonus plan is the formal program establishing eligibility, timing, and documentation for 162 life-insurance bonuses paid to select executives. The plan describes premium amounts, whether taxes are grossed-up, ownership/beneficiary rights, and performance or retention conditions. Because the policy is employee-owned, benefits are portable, and cash values can support future needs through loans or withdrawals. Plans are easy to implement and adjust annually, making them a practical alternative to complex deferred-compensation arrangements while still delivering meaningful protection and wealth-building to key contributors.

Advisors formalize a written 162 plan specifying who qualifies, how premiums are calculated, whether taxes are grossed up, and what happens if employment ends. The executive applies for and owns the policy; the company pays the bonus each year. The plan's simplicity makes it easy to launch and adjust without complex plan administration.