Primerica Life Insurance Practice Exam

The use of life insurance as an Executive Bonus is a strategy where employers provide life insurance policies as a bonus to key employees. This practice allows employers to offer additional benefits that can help attract and retain top talent.

The statement that the policy is owned by the company is incorrect because, in the context of an Executive Bonus arrangement, the employee typically owns the policy. The employer does provide the funds for the policy as a bonus, but ownership is transferred to the employee. This distinction is crucial because the tax implications and benefits of the policy can vary significantly depending on who owns the policy.

In contrast, the employer making a payment to fund the policy and treating it as a non-qualified employee benefit reflects standard practices in Executive Bonus plans. Additionally, any type of insurance policy can indeed be used in this arrangement, offering flexibility for employers to choose products that best meet their strategic goals and their employees' needs.