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My Life's Protection
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PLANNING YOUR FUTURE

My Business
Page 4



Executive Bonus Plans
By developing an executive bonus plan for a key executive, you as a small business owner can use tax-deductible bonuses to assist the executive in paying premiums on his or her own personal life insurance policy for death benefit protection and tax-deferred cash value accumulation. This strategy provides an additional fringe benefit to the executive in the form of life insurance and establishes a form of "golden handcuffs" for the small business owner to retain the executive, since the executive owns the policy.

How it Works

1. You, the employer, enter into an agreement to assist the executive with the purchase of a life insurance policy through the use of bonuses which are tax-deductible (to the business).

2. As part of the bonus arrangement, you pay the premiums on a life insurance policy insuring the executive. The executive is the owner and names the beneficiary(ies).

3. The bonus can be structured to reimburse income taxes generated as a result of the additional compensation to the executive.

You as the business owner decide which executives to include in the plan (it's not the "rank and file" employee).


Advantages of an Executive Bonus Plan

To You, the Employer:

• Helps attract, reward and retain key executives
  
• Benefits can vary among executives
  
• The "bonus" (life insurance premium) is generally tax-deductible up front to the employer because it is viewed as compensation [subject to the reasonable compensation requirements of IRC Sections 162(a) and (m)]
  
• The plan is simple to explain and implement, and administrative costs are minimal. They generally only require a corporate resolution.
  
• The bonus can be terminated any time, pursuant only to the terms of the agreement.
  
• Properly structured plans generally require little if any ERISA compliance.

Disadvantages

• Lack of control: If the executive leaves the company, s/he keeps the policy. (A potential strategy to partially address this is using a Restrictive Policy Agreement that would prevent the employee from having access to the policy's cash value until the vesting schedule expires.)
  
• Tax considerations
  
• Some ERISA (Employee Retirement Income Security Act) considerations

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About AXA Equitable

AXA Equitable is one of the premier U.S. organizations in financial protection and wealth management through its strong brands:
• AXA Equitable Life Insurance Co.
• AXA Advisors, LLC
• Alliance Capital Management, L.P.
• Sanford C. Bernstein & Co., LLC
• AXA Distributors, LLC
• MONY family of companies

AXA Equitable had approximately $598 billion in assets under management as of December 31, 2004. AXA Equitable is a member of the global AXA Group, which had over $1.2 trillion in assets under management in Western Europe, North America and the Asia/Pacific region as of December 31, 2004.

AXA Vision
The business of financial protection and wealth management involves offering our customers – individuals as well as small, mid-sized and large businesses – a wide range of products and services that meet their insurance, protection, savings, retirement and financial planning needs throughout their lives. GE-32570 b (6/05)

*Source: U.S. Small Business Administration, April 2003.
**Source: SBA Office of Advocacy "Starts and Closures of Firms 1990-2002," U.S. Census Bureau, U.S. Dept. of Labor, and Admin Office of the Courts Data.
***Source: "Business Factors: Factors Leading to Surviving and Closing Successfully," Brian Headd, Center for Economic Studies, January 2001.
****Source: "Will Your Firm Survive?" Mark Camilleri, Foundation of Human Resource Development News, August 2003. (5) Source: Top 5 Benefit Priorities Survey for 2003, International Society of Certified Employee Benefit Specialists and Deloitte & Touche LLP. (6) "Small Employers Grossly Miscalculate Disability Risk," American Council of Life Insurance, February 11, 2003. (7) Source: Institute for Women's Policy Research, "Gender and Economic Security in Retirement," May 2003.