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
Insurance company's net investment income divided by its invested assets. The greater the yield, the better the investments that are being made. ...
In personal injury cases, damages awarded to the plaintiff for the loss of joy of living. For example, if a person's negligent act results in damage to another person's leg, the injured ...
Are you fascinated by the world of real estate transactions but find the complexities of insurance and finance policies a bit daunting? If so, you're in for a treat! Today, we're delving ...
Direct payment to a new custodian for a retirement plan. This payment is not a taxable event since it is not a distribution. The payment must be between like plans; for example, one ...
Binding contract for insurance completed by telegraph. The law has recognized the date an insurance agreement is made as the date that coverage commences, rather than the date stated on the ...
Same as term Chartered Life Underwriter: professional designation conferred by the American College. In addition to professional business experience in insurance planning and related ...
Critical point in the total amount of claims paid above which the excess insurance policy pays a percentage (generally 80-100%) of the claims for any policy year experience. ...
In reinsurance contracts, clause that requires the re-insurer to provide coverage if an underlying carrier is unable to fulfill its obligations under the policy ceded to the re-insurer. ...
In an insurance policy, sentences and paragraphs describing various coverages, exclusions, duties of the insured, locations covered, and conditions that suspend or terminate coverage. ...
Have a question or comment?
We're here to help.