Who typically owns and is the beneficiary of life insurance policies in a stock redemption plan?

In a stock redemption plan, the corporation is typically both the owner and the beneficiary of life insurance policies. This arrangement is designed to provide the corporation with funds to buy back stock from the deceased shareholder's estate upon their passing. By having the corporation as the policy owner and beneficiary, it ensures that the necessary funds are readily available when a shareholder dies, facilitating a smooth transition of ownership without causing financial strain on the company.

The inclusion of the corporation as the beneficiary highlights the purpose of this type of insurance, which is to safeguard the company’s continuity and value by allowing it to purchase the shares from the deceased's estate. This is distinct from other parties that might be considered as beneficiaries in different contexts, such as the individual’s estate or the shareholder themselves, which would not effectively serve the purpose of a stock redemption plan.