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
Reinstatement of an insurance policy or bond to its original face amount (face of policy) after the payment by the insurer of a loss. The purpose of this type of coverage is to indemnify ...
To accumulate. For example, under one of the dividend options of a participating life insurance policy, dividends can accumulate at interest by leaving them with the insurance company; cash ...
Agency of the federal government formed as the result of bankruptcies of savings and loan associations during the 1930s. Insures deposits of customers up to $100,000 for each account. In ...
Modest amounts of coverage sold on a debit basis. The face amount is usually less than $1000. ...
Individual who assigns rights to a benefit. For example, a life insurance policy may be assigned as security for a loan made by the borrower. The policy protects the collateral creditor ...
Variation of group life insurance that covers a small group of persons who work for the same employer. With group life insurance, the employer owns the policy; with wholesale insurance, ...
Option under a participating life insurance policy by which the policy owner can elect to have the dividends purchase paid-up increments of permanent insurance. ...
The surplus resulting from an additional amount of capital necessary to act as a supplement to the reserves in the event of unforeseen contingencies that would impair the insurance ...
Provisions, usually requiring an additional premium, that are appended to an insurance contract. These include waiver of premium (WP), disability income (DI), accidental death clause, ...
Have a question or comment?
We're here to help.