It is pretty hard for enterprise managers these days to find the perfect candidate for their enterprise who can fulfil their responsibilities in key positions assigned to them.
When enterprise managers find the perfect candidate, they can quickly put together a compensation package to help them seal the deal. The compensation package should also include an executive bonus life insurance policy.
What Is An Executive Bonus Life Insurance Policy?
It is categorised as a non-qualified insurance plan that employers can provide to their top employees in addition to the compensation package already assigned to them.
How Does An Executive Bonus Life Insurance Plan Work?
First, it is best to remember that executive bonus life insurance for businesses is designed to benefit not only the employee of an enterprise but also the enterprise manager.
Here’s how it works –
An enterprise manager will apply for a life insurance policy for their top employees.
In such a scenario, it is best to remember that the policy owner is the enterprise manager and not the insured individual. Hence, it is evident that the enterprise manager gets to choose the beneficiaries of the insurance policy and, at the same time, has the authority to manage the funds that entail the policy.
The enterprise manager covers the cost of the policy by occasionally offering their top employees bonuses that the employees can use to pay off the premiums of the executive bonus policy.
The cash value of the policy is accessible to the employee when they reach the retirement age or before that – it all depends on how the policy terms were set by the employer when they were purchasing the policy on behalf of the insured.
If the insured dies, the benefits of the policy will be transferred to the family of the insured or beneficiaries nominated in the policy.
What Are The Benefits?
- Executive bonus life insurance plans can be customized in several ways. It all boils down to the enterprise manager and the unique enterprise requirements. Furthermore, the overall structure of an executive bonus life insurance plan can also be altered depending on the goals an enterprise manager has in mind for their key employees.
- The policy can be a reward for key employees for their loyalty. Enterprise managers can arrange for terms that keep the insured from accessing the policy’s cash value until they reach their retirement. In this way, enterprise managers can retain their top employee(s) for as long as they see fit.
- Enterprise managers can also use the insurance plan as an incentive. If the top employees are unable to reach their objectives, the employer can withhold or decrease the bonus the employee is entitled to. This will put psychological pressure on the employee to perform better and secure the bonus. If they fail to secure the bonus, they would have to pay for the insurance policy.
With the help of executive bonus life insurance policies, enterprise managers can retain their top employees, increase the profits of their enterprise and future-proof their enterprise in the long run. Hence, investing in executive bonus life insurance policies is a winning move. For more details, feel free to consult with a reputed financial advisor.