Attracting and retaining executive talent is important to a successful company, but that requires more than competitive salaries. Companies also need to craft compensation packages for executives that include specialized benefits in order to remain competitive. Executive benefits plans provide targeted financial protection, additional retirement income support, and other unique corporate perks tailored to the needs of key decision-makers and highly compensated employees. Here’s how your organization can create a benefits plan that supports the leadership it needs to be successful.
Key takeaways:
Executive benefits plans are specialized compensation and protection arrangements for senior leaders and highly compensated employees, designed to supplement standard group benefits.
Because IRS limits on qualified plans like 401(k)s leave high earners under-saved, and group disability and life caps leave them underinsured, executives who rely only on standard benefits are often under-protected relative to their income.
Core plan types include nonqualified deferred compensation, supplemental executive retirement plans (SERPs ), executive bonus and split-dollar life insurance, and supplemental disability coverage.
A coordinated strategy anchored by executive disability and executive life coverage closes income and protection gaps that traditional group benefits solutions tend to miss.
Executive benefits function as a strategic lever for recruiting, rewarding, and retaining key talent, and for supporting business continuity and leadership succession.
What are executive benefits plans?
Executive benefits plans are, primarily, specialized packages of additional insurance and retirement/compensation benefits designed to supplement standard group benefits for a select set of key leaders or highly compensated employees. In addition, an executive benefits program can include other added perks, arrangements, and policies crafted to attract and retain key executives and highly skilled employees.
These benefits plans help address gaps — such as group insurance caps and IRS limits on qualified retirement plans like 401(k)s — that can leave high earners under-saved for retirement and under-protected for things like the risk of lost income in the event of long-term disability. By closing these gaps, executive benefits plans can help companies of all sizes recruit, reward, and retain key talent.
Executive benefits plans can particularly help companies improve succession planning, as firms compete for a limited pool of top-level executive talent. However, the programs can also be tailored to help support any number of important company initiatives such as a push into a new market (which may mean attracting talent looking for different types of benefits), or to help implement DEI strategies through enhanced benefits that appeal to a broader range of demographics.
Why your leaders may be under-protected
Without an executive benefits program in place, the leaders your company depends on are often under-protected when it comes to life insurance, disability protection, and retirement savings. These are the key areas where standard group benefits fall short, which may increase the risk of leaders leaving your company for competitors that offer more comprehensive benefits. And while not all key personnel may be looking to leave, their job performance could suffer: High earners experiencing economic insecurity show an increased risk appetite, for example, which may not align with your company’s goals.1
Risks to income
The fact is, standard group benefits plans are typically not structured to meet the needs of talent earning high levels of compensation. For example, group long-term disability plans may cap monthly benefits at around $10,000–$15,000, which would result in high earners replacing a much smaller share of their income than rank-and-file employees. Long-term disability insurance is typically designed to protect a person’s finances by replacing around 60% of their salary, yet for an executive earning $1 million annually, a $15,000 monthly cap would only replace 18%, creating a clear income-protection gap.2
Moreover, group long-term disability insurance typically only replaces salaried income, so executives who earn some or most of their income via performance bonuses and commissions may face an even lower rate of income replacement, putting their lifestyle at risk. Executive disability insurance is typically needed to provide the comprehensive income protection these executives need.
Risks to family finances
Similarly, group life insurance plans typically cap payouts based on a salary multiple, which can create gaps for executives who count on performance bonuses, commissions, and other incentives for their total compensation. There also may be fixed dollar limits for group life insurance policies that do not sufficiently protect executives’ families at a level in line with their financial needs, such as covering their children’s higher education needs or paying off a jumbo mortgage. Executive life insurance policies can address such gaps, while also providing tax-advantaged cash value growth that can act as a form of supplemental compensation.
Risks to retirement savings
Most qualified retirement plans, like 401(k)s, also create financial gaps for highly compensated employees. The IRS limits total annual employee and employer contributions to $72,000, which means for an executive earning $1 million, they’re only able to put away 7.2% of their annual income in this vehicle, below the common recommendation of 15%. That’s why nonqualified deferred compensation plans (or NQDC plans) exist as a type of executive benefit for high earners, providing a way to save more pre-tax money and let it grow tax-deferred for retirement.
Other areas to address
Executives and key personnel can face a number of other challenges that leave them vulnerable in one way or another. Fortunately, executive benefits can often be customized to the needs of individuals and the executive team as a whole. According to the Goldman Sachs 2025 Executive Benefits Survey, physical and financial wellness perks are most commonly offered, with financial counseling services and executive medical exams topping the list at 76% and 68%, respectively. However, executive long-term disability and executive life insurance may provide the best opportunity to make your benefits program stand out because they are less commonly offered, at only 38% and 33%, respectively.3
Eligibility for executive benefits plans
Executive benefits plans are typically offered to select senior executives and other highly compensated individuals and can be flexibly structured to complement the business’s HR strategy as well as the executive’s goals.
You might design executive benefits plans for employees with titles such as:
Chief executive officer
Chief financial officer
President
Senior vice president
Treasurer
General counsel
Beyond these titles, you also might design and offer executive benefits to a select group of management or highly compensated employees, like certain individual contributors, where existing group benefits do not provide sufficient protection or entice recruitment and retention.
Types of executive benefits to include in a plan
Life insurance
Executive benefits typically fall into a few main categories, but a given benefit product can often serve multiple functions. This is perhaps best illustrated by the various ways life insurance can be used in a competitive benefits package.
For example, an executive bonus plan — also called a Section 162 or REBA (restricted endorsement bonus arrangement) plan — is a strategy that uses a bonus to help a key employee pay premiums on a life insurance policy they own, as a way to attract, reward, and retain key employees.
The key employee takes out a permanent life insurance policy, such as whole life insurance, and the employer covers the premiums with a bonus large enough to pay them.4 The bonus is taxable income to the employee, and the employer can deduct the expense.
At retirement (or earlier, per the plan terms), the employee can access the policy’s cash value to help supplement retirement income, or their beneficiaries can receive an income tax-free death benefit if the employee dies.5 Variable universal life insurance can also be used for added market growth potential, with the understanding that market losses can affect policy value.6
There are also other ways to provide additional coverage for executives, with benefits to both employee and employer, such as:
Executive term life insurance with higher coverage amounts, which could replace or supplement the group coverage typically offered to employees.
Split-dollar life insurance, which is a contract between an executive and employer that divides ownership of a permanent life insurance policy as well as premium payments and policy payouts. These plans are highly flexible and can provide tax advantages that make substantial coverage more affordable for the executive.
Another option is key person life insurance — a company-owned policy, not an employee benefit, that pays the business if a critical leader, such as the CEO or a key client-facing executive, passes away, helping protect against the loss of essential talent.
Disability insurance
Standard group long-term disability insurance (LTD) is designed to provide broad, employer-sponsored income protection, but it often leaves high earners underinsured, typically replacing just 50%–60% of base salary up to a $10,000–$15,000 monthly cap, and usually excluding bonuses, commissions, and equity compensation. Two other limitations concern executives:
Coverage generally ends when the employee leaves the company.
Disability definitions often shift from “own occupation” to “any occupation” over time, making it harder to qualify for benefits.
Executive disability insurance, by contrast, is a complementary, individually owned policy designed to close these gaps: higher benefit limits, a broader definition of income, portability across employers, and a true “own occupation” definition throughout the claim — without being offset by Social Security Disability Insurance (SSDI) or group LTD.
Retirement benefits
Another major component of most executive benefits is supplemental retirement planning benefits. Two popular options include:
Supplemental executive retirement plans (SERPs): Supplemental executive retirement plans are funded by the company, often by purchasing a permanent cash-value life insurance policy, which may then enable the company to provide additional payouts to an executive in retirement. Essentially, SERPs provide bonuses to executives in retirement, which can be structured in different ways, such as providing additional credit for service under defined benefit plans (a more generous formula for calculating pension payouts) or additional defined contributions based on the employee’s performance against a benchmark.
Salary deferral plans: These plans are a way for executives to defer a portion of their compensation until a later date, such as retirement. Unlike qualified retirement plans, these nonqualified deferred compensation (NQDC) plans have no IRS contribution limits. They also offer more flexibility because they can be structured to schedule distributions before retirement, for example, to help pay for a child’s college tuition.
Note that while these types of plans can enable executives to save more for retirement than standard IRS qualified plan limits, there are still compliance considerations, such as adhering to Section 409A of the tax code. That includes rules like making salary deferral elections in the calendar year before the compensation is earned. The penalties for 409A noncompliance can be severe, including immediate taxation of all the vested assets in an executive’s deferred account, plus a 20% penalty and extra interest charges. So, it’s crucial for HR teams and benefit administrators to fully understand executive retirement plans before starting them.
Other executive perks
Although the focus of many executive benefits plans is frequently on additional insurance options or retirement benefits, consider including other perks that maintain or enhance your advantage in recruitment and retention. These may include:
Aircraft or car allowance: A company car, chauffeur service, or use of the company plane is part of an executive benefits package for many C-suite employees. In fiscal year 2024, 41.8% of S&P 500® CEOs were allowed personal use of company aircraft, and 21.1% had a corporate car allowance, according to ISS-Corporate.7
Relocation assistance: Companies casting a wide search net to find the best job candidates for a key hire should consider offering generous relocation benefits as part of their recruitment strategy. However, only 3.4% of S&P 500 companies provide this perk.8
Home security: A growing trend is providing home security benefits to executives. Goldman Sachs found that 27% of CEOs have this perk, the highest rate since 2003.9
How a coordinated executive benefits strategy helps to close the gaps
Standard group benefit solutions can leave executives underinsured and under-prepared for the financial risks they face, but well-designed executive benefits strategies can fill these gaps in ways that help both the employee and employer.
When layered onto existing group benefits, executives can overcome limitations like insurance payout caps or IRS restrictions on retirement savings amounts. Meanwhile, employers can better attract and retain executives who want this confidence. A more stable executive team then supports better business continuity, even amidst significant changes like mergers and acquisitions. Strong executive benefits also support leadership succession, as these can attract top incoming talent while increasing the odds that other members of an executive team will stay on, following changes like a CEO’s retirement.
Guardian has a long history of protecting the leaders that organizations cannot afford to lose, and we can help you design an effective executive benefits strategy that closes gaps in your executive coverage. Explore our Executive Benefits hub to learn more, or connect with a Guardian financial advisor to evaluate your options in more detail.
Frequently asked questions about executive benefits
An executive benefits plan is a specialized package of benefits specifically designed for senior leaders and other highly compensated employees, designed to supplement standard group benefits in areas like insurance and retirement savings. Standard group benefits often have limitations that can cause executives to be underinsured or not be as financially prepared as they’d like, in line with their compensation, so executive benefits can close these gaps.
An executive benefits package often includes supplemental insurance, such as life and/or disability insurance, plus supplemental or enhanced retirement benefits. Some also include other types of insurance, such as long-term care insurance. Other perks may include indirect forms of executive compensation like an aircraft or car allowance, generous relocation benefits, and home security.
Specifics vary by company, but executive pension plans may offer additional retirement benefits such as supplemental executive retirement plans (SERPs), which provide additional payouts in retirement, often funded via permanent cash-value life insurance policies. Companies might also use salary deferral plans, which enable executives to defer a portion of their compensation until a later date, such as retirement, without running into IRS contribution limits.
Executive benefits plans differ from traditional group benefits like 401(k)s, such as with nonqualified deferred compensation arrangements that allow executives to defer compensation until retirement, while avoiding traditional IRS contribution limits. Another executive benefit is a supplemental executive retirement plan (SERP), which provides employer-paid bonuses in retirement. However, employers should ensure that they closely follow regulations, such as to avoid steep Section 409A penalties.
