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
U.S. government agency (formerly the Atomic Energy Commission) responsible for regulating the nuclear energy industry. The commission also provides supplemental insurance for nuclear ...
Means of selling and servicing property and casualty insurance through agents who represent different companies. The agents own the records of the policies they sell. ...
Person covered under an employee benefit insurance plan. ...
Premiums paid with funds that are not borrowed from life insurance. It is important to ascertain the finance charges and the costs/benefits of such a transaction. ...
Statement submitted to the insurance company to accompany a request for the reinstatement of an insurance policy that has lapsed. This statement certifies that the insured's health has not ...
Person by whose life the duration of an insurance policy, estate trust, or gift is measured. This person is generally referred as the insured in an insurance policy. ...
Liability incurred by a parent by reason of a tort committed by his or her minor child. ...
same as term Lost Policy Receipt: life insurance company form to be signed by a policyholder who wishes to surrender a policy that has been lost. The signed receipt then becomes evidence ...
Automatic nonproportional reinsurance treaty or automatic proportional reinsurance treaty that provides coverage for losses upon which claims are made while the treaty is in force, without ...
Have a question or comment?
We're here to help.