Broker Check



THE KAI-ZEN 162 EXECUTIVE BENEFIT PLANsm is a leveraged Section 162 Bonus Plan that allows participating owners and executives to significantly increase their death benefit coverage to protect against life's uncertainties. Through the use of specially designed insurance policies and arrangements with financial institutions, borrowed funds are used to provide increased death benefits with a funding model that creates cash reserves which can be accessed to supplement retirement income. The Kai-Zen Plansm showcases the combined IBG/NIW core competencies of utilizing aggregation and leverage to create a powerful financial benefit for management and executive level employees, professionals and business owners.

HOW IT WORKS: A 162 Plan is a program for owner executives to bonus key executives and or themselves in a cash flow effective manner. Bonuses are paid out in the normal fashion, the executive pays their tax and the remaining money is put into life insurance policies where the excess cash values grow over time. The employer takes the employee deduction as they would with any other employee compensation. The plan then adds additional premium using borrowing to increase the cash amount in the policy, thereby allowing either more death benefit to be obtained from the same bonus amount or the same death benefit with a reduced bonus amount.

Why are most 162 plans of limited interest to clients? Cash flow. For life insurance products to accumulate cash value effectively they need to be overfunded consistently year after year. Unfortunately most 162 plans assume the company has the cash flow available to allocate to these plans for at least the first 10 years, however, this is rarely the case resulting in disappointing returns for the employee.


The Kai-Zen Plansm combines a smaller executive bonus (saving 25-40% of cash flow for the same benefit) with financing to help fully fund the same sized life policy. Premiums are funded into the policy for at least 10 years, thereby optimizing its accumulation potential, allowing several possible advantages.


 Less money is required for the same Death Benefit
or an increased benefit for the original amount.


 By over funding every year for 10 or more years, the policy
cash values compound resulting in significantly higher revenue
flows (policy loans) net of loan repayment to the executive that
would otherwise be possible. All this is done without draining
cash flow from the company.


 For those below the age of 55, there is a great probability of
supplemental post retirement income in the form of policy loans
that would be difficult to self-fund otherwise, thereby making the
plan beneficial irrespective of when the insured dies.


 Because of the partial payments by the executive to the policy,
no further outside collateral is required to secure the loan.