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
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Same as term Friendly Fire: kindling intentionally set in a fireplace, stove, furnace, or other containment that has not spread beyond it. Property insurance does not protect against damage ...
Group that, with the exception of the government, establishes the standards for all financial accounting and reporting for the various entities in the United States. The standards enable ...
Date at which an insurance policy goes into force. ...
Rate-making division of insurance services offices (ISO) for inland marine insurance coverages of member companies. ...
Additional Living Expense Insurance is a type of coverage present on several types of Homeowner’s Insurance that reimburses additional costs caused because of the insured’s ...
Portion of reinsurance premium received by the reinsurer that relates to the unexpired part of the reinsured policy. ...
Coverage for negligent acts or omissions of an operator of a motel or hotel resulting in bodily injury to guests and damage or destruction of a guest's property. ...
Initial reserve plus the terminal reserve divided by two for any year of valuation. ...
Have a question or comment?
We're here to help.