IFR Module 267 — Business-Owned vs. Personally-Owned Life Insurance Analysis
Purpose: Compare the after-tax cost of life insurance when owned personally vs. owned by the business. Analyze deductibility, entity type differences (C-Corp vs S-Corp), and when a Section 162 Executive Bonus Plan makes the most financial sense.
Input Parameters
Insurance Details
Tax Rates
Business-pay is more cost effective
Personally-Owned
Business-Owned
Section 162 Executive Bonus Plan Analysis
Under Section 162, the business pays the premium as a bonus to the executive, who owns the policy personally. The bonus is tax-deductible to the business but taxable income to the executive.
Cumulative After-Tax Cost Comparison
Year-by-Year After-Tax Cost Analysis
Year
Personal Pay (After-Tax Cost)
Business Pay (After-Tax Cost)
Sec. 162 Bonus (After-Tax Cost)
Best Option
Disclaimer. Third-party product names and methodology names are the property of their respective owners. Reference does not imply endorsement or affiliation. This tool is the work product of Nate Cocco; the analysis is reviewed by Nate before any client recommendation.