Many employers often seek additional incentives to attract or motivate their executives and an executive bonus plan provides that.
A life insurance policy is the only financial vehicle that can fund an executive bonus plan. Any type of permanent life insurance will work but because of the flexibility it brings, Universal Life may be the best choice. It offers flexible premiums i.e. Bonuses from year to year The executive is the owner of the policy and names the death benefit beneficiary and the employer pays the premiums or bonus in the form of additional compensation. The compensation is accounted for as salary to the executive. As such, it is deductible to the employer and taxable to the executive.
The executive has access to the cash value may take loans or surrender the policy.