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
Return of a percentage of premium paid by a business firm if its loss record is better than the amount loaded into the basic premium. ...
Coverage for routine personal legal expenses, including probate, criminal defense, and divorce. ...
Falsification of birth date by an applicant for a life or health insurance policy. If the company discovers that the wrong age was given, the coverage will be adjusted to reflect the ...
INSURANCE health insurance policy providing coverage for an insured's medical expenses except those that are specifically excluded. This may be the most advantageous medical expense policy ...
A procedure in which the employer has absolute liability for the injuries incurred by the employee and the employee does not have the right to sue the employer for those injuries suffered. ...
Means used by a direct fire underwriter to protect against accumulation for a fire account, as well as against extremely large fire account liability. For example, heavy liabilities under ...
Act first passed by the United States Congress in 1981 and later amended in 1986 that provides for the establishment of risk retention groups whose purpose is to sell product liability ...
Policy that comes into existence or adjusts the amount of coverage to provide protection for newly acquired or increasing values of an insured's real or personal property. ...
Single limit insurance program remaining in force for several years as compared with traditional insurance programs where there is a series of annual limits. The LUMP insurance program is ...
Have a question or comment?
We're here to help.