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Reward and Retain Top Talent with an Executive Bonus Plan
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.
About Federated Insurance
This content was brought to you by Federated Insurance. Federated was founded in 1904 by farmers and business owners in Owatonna, Minnesota, the company began by offering better value for insurance premiums and steadily expanded its coverage across various industries. Over the decades, it evolved into one of the nation’s leading mutual insurance companies, pioneering multiline coverage and adding services like life insurance, workers compensation, and estate planning. With a strong focus on risk management and partnerships, it now serves customers in 49 states and D.C., while maintaining its headquarters in Owatonna. Rooted in business values, the company continues to protect and empower its clients with over a century of expertise. Federated Insurance is proud to be a partner of FCA International and its contractor members. Click here to locate your representative.