Under this type of plan, an employer purchases and pays for a life insurance policy for a select-group of employee’s. The employer will fund the policies via a pay raise to the employee’s, which is equal to the policy premium. In some cases, an additional bonus is needed to cover the income tax on this additional pay. The employer can pick and choose specific employee’s to participate in the plan.
With this type of plan, employee’s will have full rights to the policy, its cash value, and can take tax-free income from the policy in the future. As a mechanism to increase the plan’s retaining power, a restrictive endorsement and vesting schedule may be added.
Provide an exclusive compensation package for selected employee’s
Offer tax advantages for the employer
Easy to implement and administer
Did You Know?: As you will hear in the short video below, an executive bonus plan is selective, meaning you the employer, get to choose which employee’s participate.
The Harrin Group offers free, comparative quotes on executive bonus insurance from multiple insurance carriers so you can get the best possible rate.
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Source: North American Company for Life and Health Insurance