Many businesses rely on key employees. These people are critical to daily operations and play a significant role in keeping things running smoothly and successfully. A challenge for employers can be finding ways to retain and reward these employees. An executive bonus plan can offer an effective solution to help achieve both goals. 

An executive bonus plan allows an employer to pay for personally owned life or disability insurance for a key employee. The business provides the premium as a bonus, which is tax-deductible as employee compensation. In turn, the employee pays income tax on the bonus. 
If the employee passes away, their beneficiary receives the death benefit tax-free. If the employee becomes disabled, the disability benefit is paid to them tax-free.

Benefits for the Employer:

• Executive bonus plans are easy to set up and don’t require IRS approval.

• Premiums are tax-deductible as part of the employee’s compensation.

• Employers can choose which employees to cover, as well as the benefit amounts and premiums.

• Plans can be ended at any time.

Benefits for the Employee:

• Employer-paid life insurance can provide a tax-free death benefit.

• Employer-paid disability insurance can offer income protection.

• Employees own their policies and can name their beneficiaries.

• Policies are portable, so employees can take them if they leave the company.

Contact your local Federated marketing representative to learn how an executive bonus plan can help you. They can connect you with specialists and guide you through your options.