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
Management of investment risks associated with business risk, interest rate risk, political risk, and purchasing power risk. Usually fixed income financial instruments, such as fixed dollar ...
Postponement of taxes on investment or other earnings until the investor begins to consume them and anticipates being in a lower tax bracket. One example of a tax-deferred investment is an ...
Present value of a series of payments such that the first payment is due immediately, the second payment one period from hence, the third payment two periods hence, and so forth. The ...
Group insurance contract under which a periodic (usually monthly) disability income benefit is paid to the insured as long as he or she remains disabled. ...
Extension of coverage available under the Standard Fire Policy. The standard policy only covers the perils of fire and lightning. The endorsement covers riot, riot attending a strike, civil ...
One named under provisions of the employee retirement income security act of 1974 (erisa) for a terminated pension plan with an unfunded liability for its benefits. ...
Insurance policy under which payment is made for a loss not subject to any deductible or under which payment is made up to the limits of the policy, and then an excess insurance policy ...
Same as term Fortuitous Loss: loss occurring by accident or chance, not by anyone's intention. Insurance policies provide coverage against losses that occur only on a chance basis, where ...
Agent who is licensed and who markets and services insurance policies in a state in which he or she is not domiciled. ...
Have a question or comment?
We're here to help.