What life insurance-based executive benefit plans are available to Nevada businesses?

Nevada businesses use several life insurance-based executive benefit plans to attract, retain, and reward key executives. These arrangements leverage permanent life insurance's unique tax characteristics to create supplemental benefits outside of qualified retirement plans.

Executive Bonus (Section 162 Plan): the employer pays the premium on a life insurance policy owned by the executive. The premium is treated as taxable compensation to the executive and is deductible by the employer. The executive owns the policy and its growing cash value — a meaningful wealth-building benefit.

Split Dollar Life Insurance: the employer and executive share the cost, ownership, and benefit of a permanent life insurance policy. Various structures allow the employer to recover its premium outlay from the death benefit or cash value while the executive accumulates benefits.

Surplus Income Plan (SIP) / Non-Qualified Deferred Compensation (NQDC) backed by life insurance: the employer informally funds a deferred compensation obligation to the executive using a permanent life insurance policy. The policy's cash value grows to fund the future deferred compensation payout.

Nevada's no state income tax environment makes these arrangements especially favorable — executives retain more of their benefit than counterparts in high-tax states. Agents in our network work with Nevada business owners to structure these plans in coordination with legal and tax counsel. Actual plan design should involve qualified legal and tax advisors. Plan structures and tax treatment vary.