Broker Check

Executive Bonus Plans

With an EBP, the company uses compensation bonuses to assist the executives in savings for their own personal financial and retirement goals. The company pays the premiums on a specially designed, executive-owned life insurance policy and treats the premium amount as a compensation bonus to the executive. The premium amount is tax deductible to the corporation and taxable income to the executive. If properly structured, the tax-advantaged cash value accumulation within the policy and the death benefits can provide the employee with additional retirement income and survivor benefits.