One Big Beautiful Bill, five big opportunities
The One Big Beautiful Bill Act unlocks options that can create planning opportunities for your clients using life insurance. After years of watching tax policy evolve and wondering what comes next, we now have a road map and a fresh window of opportunity – and life insurance is a big part of that.
Whether you’re guiding business owners, high-income clients or legacy-minded families, this new legislation can create powerful planning openings. From estate strategies to executive compensation to tax-efficient income planning, here are five ways you can help clients make the most of the latest legislation through life insurance products.
- Take advantage of estate planning predictability with the new law
With the $15 million inflation-indexed federal estate and gift tax exemption now codified into law, help clients act with time-tested strategies. A will is only one piece of the puzzle, and many estate-planning needs still come down to liquidity. A life insurance death benefit can offer cash to retire debt, replace income, bolster retirement funding, equalize inheritances and protect a business. Consider:
- Irrevocable life insurance trusts to provide estate liquidity
- Spousal lifetime access trusts to shift growth out of the estate while preserving access through a spouse
- Intentionally defective grantor trusts to freeze estate values as the grantor pays the income tax
Prepare clients for state-level estate and inheritance taxes using life insurance — often with lower exemptions — through domicile reviews, asset titling, lifetime transfers and liquidity planning.
2. After-tax cash flow options
Pass-through owners are maintaining economic parity with C corporations and now more predictable after tax-cash flow post H.R. 1. With that stability, clients can address previously overlooked business and personal goals. They can also fund supplemental income and executive benefit arrangements, including executive bonus plans, split-dollar arrangements using life insurance and nonqualified deferred compensation, as well as trust-based planning through ILITs and SLATs.
3. Tax rules tighten on nonprofit executive pay
With the tax on tax-exempt executive compensation now covering more top employees after H.R. 1, traditional executive benefit packages face greater scrutiny. Nonprofits can still compete by using split dollar arrangements using life insurance — either loan or endorsement split dollar structures — to redesign executive packages, limit taxable compensation and help attract top talent.
4. Tax rules adjusted for smaller companies
Small and mid‑sized companies are operating in a more favorable environment after the One Big Beautiful Bill Act, with stronger near‑term cash flow that can be directed to supplemental income plans, executive bonus, split-dollar arrangements using life insurance, nonqualified deferred compensation and funding for buy‑sell agreements.
5. Top federal income tax frozen
For high earners, a 37% top rate and clarified State and Local Taxes rules in H.R. 1 create a lower-than-expected tax environment and greater predictability. This opens room for advanced planning approaches such as Roth conversions to shift growth into tax-free accounts and estate-freeze techniques using life insurance to lock in values and move future appreciation out of the estate.
The One Big Beautiful Bill Act dominated headlines nationwide — and for advisors and agents, it can be a game-changer. Your clients are looking for leadership. Now is the time to help them act with confidence — before these windows close.
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