Who is the owner of the policy in an executive bonus plan?

Who is the owner of the policy in an executive bonus plan?

• A. The insurance company
• B. The employer
• C. The executive
• D. The executive's family

Answer: (C)

In an executive bonus plan, the owner of the policy is the executive themselves. This structure is designed to provide a tax-advantaged benefit to the executive, typically in the form of life insurance or other financial products. The employer usually pays the premiums on the policy as a part of the compensation package, which is often tax-deductible for the employer. However, because the executive is the owner of the policy, they have control over it, including the ability to choose beneficiaries and access cash value, if applicable. This arrangement aligns incentives between the employer and the executive, fostering loyalty and retention, while also offering the executive personal benefits from the policy ownership.

In an executive bonus plan, the owner of the policy is the executive themselves. This structure is designed to provide a tax-advantaged benefit to the executive, typically in the form of life insurance or other financial products. The employer usually pays the premiums on the policy as a part of the compensation package, which is often tax-deductible for the employer. However, because the executive is the owner of the policy, they have control over it, including the ability to choose beneficiaries and access cash value, if applicable. This arrangement aligns incentives between the employer and the executive, fostering loyalty and retention, while also offering the executive personal benefits from the policy ownership.