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Executive Bonus Life Insurance

More and more companies opt to offer their executives what is known as an "executive bonus", an offer under which the company pays the premiums on the executive's life insurance policy, also been known as key man life insurance. This fringe benefit is a sound business decision, offering numerous advantages to both employer and employee.


Other than the added employee loyalty, the employer can deduct the premium payments, as tax-exempt contributions. The employer also has a great degree of control, with full power to determine which employees receive the executive bonus, and the size of the bonus.

The employee, in turn, receives a very flexible benefit. In a policy with cash values, the employee can take out loans against that policy, with no penalties for early withdrawals, as there would be with an IRA. The executive bonus is also fully portable, not forcing the executive to remain with a particular employer for any set amount of time.


The executive still must claim the premium payments as though they were received as regular income. Frequently, the employer will add a "gross-up", an additional bonus meant to cover the employee's tax costs. Should the executive pass away, the benefits paid out to the heirs are tax-free.

An executive bonus plan is an attractive offer, which may help you attract and keep a key employee or, as an employee, may provide you with added financial security in life and protection for your family in the case of your unexpected death.


To find out more about the executive bonus plan, we recommend that you consult with an insurance professional. Our expert insurance agents will be able to address your specific questions and concerns.