Certified Financial Consultant (CFC) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Certified Financial Consultant Exam. Enhance your understanding with detailed questions, hints, and explanations. Boost your confidence for the CFC test!

Start Multiple Choice Practice Test
Start Flash Cards

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

In the Executive Bonus plan, who owns the insurance policy and pays the premium?

  1. The company is the owner, and the executive pays the premium

  2. The executive is the owner, and the executive pays the premium

  3. The insurer is the owner, and the company pays the premium

  4. The executive is the owner, and the company pays the premium

The correct answer is: The executive is the owner, and the executive pays the premium

In an Executive Bonus plan, the executive owns the insurance policy and is responsible for paying the premium. This setup allows the executive to have complete control over the policy, which can be a valuable asset for personal financial planning and death benefit purposes. By owning the policy, the executive can designate beneficiaries and manage the benefits in a way that aligns with their financial goals. Additionally, the premiums paid are usually considered a bonus and may be tax-deductible for the company as a business expense, while the executive may have to report the premium amount as income. This structure incentivizes executives by providing them with a valuable benefit without the company retaining ownership of the policy, thus enhancing the executive's personal investment in the plan.

More Questions Like This