As the name implies, a carve-out plan occurs when part of an employee's group term coverage is "carved out" and supplemented with permanent life insurance protection funded through an executive-bonus or split-dollar arrangement. Employer premium payments are predictable over the life of the contract.

If an executive bonus plan is selected, the premiums are still tax deductible (subject to Section 162 and Compensation Limits). If a split-dollar plan is created, the employer may get back all of its premiums when the plan terminates.

Putting together a plan to help ensure your financial success can be a complicated process. MassMutual can help you with this and other business solutions.