A Smart Way to Reward (and Keep) Your Best Employees

How local business owners are using life insurance to stay competitive—without the red tape

When you run a business, there’s always something competing for your attention: customers, payroll, inventory, taxes. But one of the hardest things to juggle these days?

Finding and keeping good people.

It doesn’t matter if you’ve got 3 employees or 30. If someone on your team shows up early, solves problems, builds trust with clients, or keeps things running behind the scenes—they’re worth hanging onto. The question is: how do you make it clear they matter, without stretching your budget or getting buried in paperwork?

Here’s one option you might not have considered:
An executive bonus plan funded with life insurance.

It’s not as complicated as it sounds. In fact, this kind of plan is surprisingly simple, tax-efficient, and flexible. Let’s break it down.

What’s an Executive Bonus Plan, Anyway?

An executive bonus plan is a way to reward top employees with something more meaningful than a holiday gift card—but still easy to implement. The basic idea is this:

• You give a bonus to your key employee.

• That bonus is used to pay for a life insurance policy (or annuity) that the employee owns and controls.

• The bonus is a tax deduction for your business.

• The employee can use the plan as retirement support, or a portable financial asset that stays with them—even if they change jobs later on.

That’s it.

No government filings. No long-term tracking. No major compliance headaches.

You stay in control. Your employee gets a real, long-lasting benefit.

Why This Works for Small Business Owners

Large companies have teams of HR professionals and benefits departments. You don’t. That’s what makes executive bonus plans so attractive for businesses like yours.

These plans can help you solve what some folks call “The Four Rs” of employee management:

1. Recruiting

Want to stand out when hiring? Offer something that shows long-term commitment. Candidates notice that.

2. Rewarding

Not every benefit plan gives you the freedom to pick and choose who gets what. Executive bonus plans let you reward your top performers—not just everyone across the board.

3. Retaining

When employees know they’re being invested in, they tend to stick around. And when the bonus is tied to something they own, that loyalty runs even deeper.

4. Retiring

Your employee wins here too. Life insurance policies (especially permanent ones) can build cash value over time, which can help supplement retirement income later in life.

And Yes, It’s a Win for the Employee Too

Let’s be real: employees want more than just a paycheck. They want to know their future matters. With an executive bonus plan:

• They get to choose the product (within reason).

• They own it. It’s theirs to keep, even if they leave the job.

• It’s flexible. If they pick a permanent life insurance plan, it can grow in value and offer real benefits down the road.

While the bonus is taxable income, many business owners choose to cover the taxes as part of the bonus—so the employee doesn’t take a hit.

Bottom line: this feels like a gift, not just a line on a paycheck.

Real Flexibility for Real Life

There are a few ways to structure a plan like this, depending on how much you want to contribute, whether you want the employee to chip in, or how you want to handle taxes. We can walk you through options like:

• Full funding (you cover the bonus + taxes)

• Matching contributions

• Tax-offset bonuses

You can even include what’s called a REBA (Restrictive Executive Bonus Arrangement), which lets you retain some control while still giving the employee ownership. That’s useful if you want to keep the benefit tied to long-term commitment.

A Door Into Bigger Conversations

For many of the business owners we work with, this starts out as a way to reward one or two key people. But it often grows into something bigger: a more complete strategy for retirement planning, succession, or even employee benefit branding.

And every time we help set up one of these plans, we also help protect families—yours and theirs.

Let’s Talk About It

You don’t need to be a large company to offer meaningful benefits. You just need the right tools—and a team that knows how to put them to work for you.

If you have a few people you’d like to reward, protect, or keep around longer, let’s have a conversation. We’ll show you how an executive bonus plan could work in your world—simple, smart, and built around your priorities.

Stockman Insurance Agency
Chattanooga, TN
📍 4202 Brainerd Road
📞 (423) 510-9197
🌐 www.stockmanagency.com