Aloha to Better Benefits: How Small Business Owners Can Use Executive Bonus Plans with IULs to Build Loyalty & Wealth
Intro: A Legacy of Loyalty Starts with You
As a small business owner, especially one with a close-knit team of skilled artisans or dedicated employees, you know that your people are the heart of your operation, your Ohana. When you care for your Ohana, they care for your business in return.
While many small businesses offer traditional retirement plans like 401(k)s, those don’t always provide the flexibility, protection, or long-term growth your team deserves. That’s why more owners are turning to a smart, tax-advantaged alternative: the Section 162 Executive Bonus Plan using Indexed Universal Life Insurance (IUL).
Let’s dive into why this strategy is a powerful way to reward your key employees—and how it helps you shine your light as a leader.
Why Invest in Employee Retirement Plans?
🌴 Retain Skilled Workers
Finding and training a great team is tough. Keeping them? Even tougher. Offering benefits like an Executive Bonus Plan helps your employees see their future with you, not someone else.
🌞 Boost Loyalty & Morale
When people feel cared for, they give their best. Retirement plans that go beyond the basics show that you’re invested in their long-term well-being, not just their productivity.
🌊 Stand Out from the Crowd
Many small businesses can’t match corporate salaries, but you can offer something even more meaningful: a plan that builds tax-free retirement income, provides life insurance protection, and grows cash value over time.
Lead your team to success!
When you provide your employees with peace and safety, they repay you with loyalty and hard work, leading to success for both you and them.
Teamwork makes the dream work!
What Is a Section 162 Executive Bonus Plan?
A Section 162 Bonus Plan allows a business owner to provide a life insurance policy (like an Indexed Universal Life Insurance plan) to a key employee as a tax-deductible bonus. The employee owns the policy and can access its benefits for decades to come. These don’t have to be offered to all employees, but they are a great tool to have in the recruiting process and retaining key employees.
Instead of contributing to a traditional 401(k), you’re giving them access to a flexible, tax-advantaged life insurance strategy that can be used for retirement, emergencies, or leaving a legacy.
🌺 Benefits of an IUL-Based Executive Bonus Plan
For Employees:
Tax-Deferred Growth – IULs accumulate cash value based on index performance, offering market-linked potential without the risk of loss.
Tax-Free Retirement Income – Employees can withdraw or borrow from their policy tax-free, creating a personal pension that doesn’t depend on Wall Street.
Permanent Life Insurance – Includes a death benefit that protects their family while they’re working and long after they retire.
Living Benefits – Many policies allow access to funds in the case of chronic or critical illness, adding extra peace of mind.
Ownership & Control – Employees own the policy outright and can use it however they choose.
For Employers:
Employee Retention Strategy – Want to keep your top talent? Create a golden anchor with long-term value that’s hard to walk away from.
Simple Setup – No IRS filings, no ERISA rules, no costly administrative burden.
Tax-Deductible Bonus – The premium paid is typically tax-deductible as a business expense.
Flexibility – Choose who receives the bonus—you’re not required to offer it company-wide.
Strengthen Company Culture – Offering thoughtful benefits builds goodwill, fosters trust, and enhances your brand’s reputation.
Talent is difficult to find!
Take care of your skilled employees, and they will take care of your business!
A Real-Life Scenario: The Artisan’s Edge
Imagine you run a small woodworking or metalworking business with 5–10 highly skilled employees. These aren’t folks you can replace easily—they’re craftsmen with years of experience. You want them to stay for the long haul.
By setting up an Indexed Universal Life Insurance policy through a 162 Bonus Plan, you give each of them a tool to grow wealth, protect their families, and plan for retirement—all while showing that you honor their craftsmanship and commitment.
Why Choose an IUL Over a 401(k)?
✅ No contribution limits like traditional 401(k)s
✅ Tax-free access to cash value in retirement
✅ No market losses—your money is never directly invested in the market
✅ Death and living benefits, not just retirement income
✅ More control, more flexibility, and more aloha
Closing Thoughts: Build a Legacy, Not Just a Business
At Blessed Ohana, we believe your business should reflect your values—faith, family, and financial freedom. By offering Executive Bonus Plans using Indexed Universal Life Insurance, you’re not just giving a benefit—you’re creating opportunity, showing love to your team, and laying down roots for a brighter future.
Let’s help your business savor life’s moments, shine your light as a leader, and share the joy of financial security with your team.
Ready to Explore a Smarter Retirement Strategy?
Let’s talk. We’ll help you design a customized IUL retirement plan for your key employees and show you how it benefits everyone, without the red tape of a traditional 401(k).
