Benefits Of Business Life Andhealth Insurance (key Person Insurance)
Definition of "Benefits of business life andhealth insurance (key person insurance)"
Life insurance and long-term disability income insurance on major employees, with benefits payable to the business. Key person insurance has these advantages:
- enhances the ability of the business to continue operations;
- fosters smooth sale of a going business between an estate and a purchaser by providing funds to buy out the interest of a deceased key person;
- encourages key employees to stay on the job;
- attracts new key employees;
- provides funds for expenses of hiring and training of a replacement key employee;
- provides a line of credit (A permanent life insurance policy has cash values that are available for loans at advantageous rates.);
- policy proceeds, which are income free, are payable even if the key person is no longer in the employ of the business at the time of death; however, the business must continue to make the premium payments after the key person leaves the employment;
- a life insurance policy can be surrendered for its cash value or sold to the insured key person; thus, the business will usually at least receive the return of premiums;
- long-term disability income insurance on a key person also provides funds for salary continuation to the disabled key person. (For temporary disability, the business might prefer to self insure because the expense of premiums for this coverage is generally excessive when compared with the potential income benefits.)
Popular Insurance Terms
Method of operation. ...
Life insurance and long-term disability income insurance on major employees, with benefits payable to the business. Key person insurance has these advantages: enhances the ability of the ...
Additional amount of life insurance above that provided by the employee benefit plan (standard group life plan) that may be chosen by the employee. A limit is usually placed on this maximum ...
In life insurance, the exchange of a series of installment payments, as the result of an installment settlement, for a lump sum distribution. ...
Statement showing assets and liabilities of an individual. ...
Termination of a plan. Under federal tax law, a plan can only be terminated for reasons of business necessity. Otherwise, prior employer tax deductible contributions under the plan are ...
Academic publication of the American risk and insurance association in which articles deal with aspects of risk, insurance, and allied fields of study. ...
Endorsements to life insurance policies that provide additional benefits or limit an insurance company's liability for payment of benefits under certain conditions. These include: Waiver of ...
Payment of premiums before their due date. In pension plans, premium payments are allocated to the payment of future benefits prior to benefits becoming payable. ...
Have a question or comment?
We're here to help.