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
Health insurance plan where a group of physicians and dentists provide medical services to a group of individuals for a predetermined fee. It is a basic type of HEALTH MAINTENANCE ...
Period of time during which notice of claim and proof of loss must be submitted by the insured or his or her legal representatives. ...
First historical mortality table used for the calculation of premium rates for group annuities. This table was subsequently replaced by the group annuity table, 1971. ...
Law under which one state gives favorable tax treatment to an insurance company domiciled in a different state that is admitted to do business, provided the second state does the same for ...
Largest property and casualty insurance company trade association in the world (international membership)whose objectives include the service of its membership through positive legislation ...
Income (premiums + investment earnings) minus disbursements (dividends + death claims + policies surrendered for benefits + general expenses). ...
Clause in a property insurance policy that requires the insurance coverage in that policy to be allocated in the proportion that it bears to the total insurance coverage in force from all ...
Decision in the absence of a plaintiff or defendant at the specified court time. ...
Life is unpredictable so to compensate this, people have invented insurance. Insurance deals with unforeseen events. Sometimes insurance companies cover only a part of your losses and a few ...
Have a question or comment?
We're here to help.