What is an Executive Bonus Plan primarily used for?

An Executive Bonus Plan is primarily designed to reward key employees with insurance benefits, which are often funded by the employer through a bonus provision. These plans provide a way for businesses to recognize and incentivize their most valuable employees, typically executives or key personnel, by offering them life insurance or other benefits as part of their compensation package. This type of plan not only enhances employee retention and satisfaction but can also serve as a strategic tool for attracting top talent to the organization.

The focus on rewarding key employees through bonuses allocated for insurance makes this option particularly appealing, as it can boost morale and encourage loyalty. It allows the company to provide additional compensation that is linked to the employee's value to the organization without directly adding to their salary.

The other options do not effectively capture the primary purpose of an Executive Bonus Plan. While the plan can have tax implications, its main function is centered around employee rewards and benefits rather than solely minimizing tax liabilities or covering health expenses.