What entity typically owns policies in a Stock Redemption Plan?

In a Stock Redemption Plan, the business entity itself typically owns the insurance policies. This plan is designed for companies to buy back shares from shareholders, often in the context of a buy-sell agreement. When a business entity owns the policy, it can use the death benefit to fund the purchase of the deceased shareholder’s stock, ensuring the remaining shareholders can maintain control and continuity within the business.

The ownership by the entity allows for seamless financial planning, as the policy proceeds can be allocated specifically to provide the necessary capital for the redemption of shares. This arrangement often helps to prevent any financial strain on the business at the time of the shareholder's passing, making it a strategic choice for organizations looking to manage ownership transitions effectively.