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
Amount in a cash value life insurance policy that a policy owner will receive upon surrender of the policy, minus any outstanding loan and accrued interest. A table in the policy shows the ...
Curve that results when yields on short-term treasury issues exceed those on long-term government debt. A widely accepted theory holds that when short-term and intermediate term issues are ...
Circumstance in which no agent is servicing a debit. ...
In property insurance, when the insurance policy contains this clause, coinsurance defines the amount of each loss that the company pays according to the following relationship:Amount of ...
Damage or destruction of property and/or property that is illegally transferred as the result of misconduct of individuals. The risk is insurable. ...
Probable number of times that a specified event is likely to occur. For example, if E is the event, then the odds for E occurring are X to Y according to the following relationship: P (E) ...
Insurance established under the federal Railroad Retirement Act for railroad employees, covering death, retirement, disability, and unemployment. Benefits are adjusted for cost of living ...
Coverage on an all risks basis for glass breakage, subject to exclusions of war and fire. Thus, if a vandal throws a brick through a window of an insured's establishment, the coverage would ...
In a commercial general liability (comprehensive general liability) policy, exclusion of coverage for sold premises. The objective of this exclusion is to eliminate coverage for property ...
Have a question or comment?
We're here to help.