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
Unincorporated association with each insured insuring the other insureds within the association. (Thus, each participant in this pool is both an insurer and an insured.) An attorney-in-fact ...
Transfer of property from a bailor to a bailee; for example, transferring a suit to be cleaned from the bailor (owner) to the bailee (cleaners). ...
Addition to a business property insurance policy to cover loss of earnings, subject to a monthly limit, in the event that property of an insured is destroyed and a business cannot continue. ...
Statement of the financial condition of the insurance company, as well as significant events during the year in which the company has been involved and/or that have affected the company. ...
Circumstances that encourage the organization of pension plans by employers. For example, employer contributions are tax deductible as business expenses and not currently taxable income to ...
Record of losses, whether or not insured. This record is used in predicting future losses and in developing premium rates based on expectation of insured losses. ...
Commission that is paid based on how profitable a particular type of business proves to be that is written by an agent. ...
Coverage against loss as the result of a burglary. Found as part of the commercial package policy that has generally replaced the special multiperil insurance (smp) policy and the ...
Organization founded in 1993, the thesis of which is to apply quality management principles to insurance functions. To this end, the organization is involved in insurance industry-wide ...
Have a question or comment?
We're here to help.