Executive bonus is described as which of the following?

Executive bonus is described as which of the following?

• A. Key person insurance
• B. Permanent life insurance
• C. Term life insurance
• D. Temporary life insurance provided for a specific period of time

Answer: (D)

Executive bonus plans are built around an employer paying the premium on a life insurance policy for an employee as a form of added compensation. Because the coverage is tied to a defined period—often the length of employment or a set term—the policy is described as temporary life insurance provided for a specific period. The employee typically owns the policy and the death benefit goes to the designated beneficiary, while the employer’s premium payments are considered part of compensation rather than a long-term business protection. This focus on a defined, time-limited coverage is what makes the description the best fit.

Executive bonus plans are built around an employer paying the premium on a life insurance policy for an employee as a form of added compensation. Because the coverage is tied to a defined period—often the length of employment or a set term—the policy is described as temporary life insurance provided for a specific period. The employee typically owns the policy and the death benefit goes to the designated beneficiary, while the employer’s premium payments are considered part of compensation rather than a long-term business protection. This focus on a defined, time-limited coverage is what makes the description the best fit.