Who is the owner and payer of an Executive bonus plan?

In an Executive Bonus plan, the executive is typically the owner and payer. This arrangement allows the employer (the company) to provide a bonus to the executive, which is then used by the executive to pay the premiums on a life insurance policy owned by the executive.

The primary reason the executive is considered the owner is that they control the policy and its benefits. The executive receives the tax benefits associated with owning the policy as well. Even though the employer may facilitate the funding of the bonus, it is the executive’s responsibility to manage the policy and make premium payments. This structure aligns the interests of the executive and the company, as it serves as an incentive to retain key employees by providing them with a valuable financial benefit.

The insurance company is merely the entity that issues the policy and does not have ownership or payment responsibilities in this scenario. Additionally, while beneficiaries are designated to receive the policy's death benefits, they do not have any ownership or payment obligations within the context of the Executive Bonus plan.