What is the purpose of an executive bonus plan in life insurance?

An executive bonus plan in life insurance serves the specific purpose of providing additional compensation to key employees within an organization. This type of plan is often used by employers to incentivize and retain talented individuals by offering them a financial reward that can be used for various benefits, including the purchase of life insurance.

The plan typically involves the employer paying a bonus to top executives, which can then be used to pay for a life insurance policy. This structure not only provides executives with an immediate cash benefit but also helps to ensure that their families are financially protected in the event of their untimely death. This aligns the interests of the employees with those of the business, as it enhances employee loyalty and motivation while benefiting the company by safeguarding its essential workforce.

In contrast, the other options do not accurately reflect the primary goal of an executive bonus plan. While retirement funds and healthcare cost management are significant concerns for employees, they are not the principal focus of an executive bonus plan related to life insurance. Offering life insurance to all employees typically involves different policies and plans that extend beyond the specific aim of an executive bonus plan. Thus, the recognition of the executive's role and bonus as a strategic tool makes the correct choice clear.