One way to attract, reward and retain top employees is through the use of an executive bonus plan.
An executive bonus plan is a flexible and discretionary plan that can be a simple and cost-effective way to provide a tax-deductible benefit to a key employee. It is a basic arrangement where the employer makes the premium payments for a life insurance contract owned by the employee. The bonus is usually tax-deductible for the business and is taxable to the employee as ordinary income.
Potential advantages for the employer:
- The employer selects which employees will be eligible to receive the bonus.
- The employer determines the amount of the bonus for each eligible employee.
- The employer receives a tax deduction equal to the amount of the bonus.
Potential advantages for the employee:
- The employee owns the contract and can name the beneficiaries.
- Liquid cash is available upon the employee’s death and life insurance death benefits are usually received income tax-free.
- Any available cash values are accessible through loans and/or withdrawals.
For more information on how an executive bonus plan can help you, please talk to a Modern Woodmen representative.
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Term life insurance
No one expects to have a fatal accident, get sick or die too soon, but what if? What if those who depend on your income no longer could? Term life insurance can be an affordable way to get the protection you need to keep your family, your business, and your hopes and dreams alive. With term life insurance, your beneficiaries receive income-tax free money if you die during the term period – without the delays and expense of probate.