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
Same as term Insuring agreement: section describing coverages under a policy. Elsewhere in the policy other sections may restrict or exclude coverages. ...
Endorsement to personal automobile policy (PAP) that covers an insured involved in a collision with a driver who does not have liability insurance. ...
Trust under which grantor retains income from the assets that have been transferred to the trust. This trust permits the avoidance of probate, protects the assets from creditors, and leads ...
Provision of a property policy that excludes construction that is likely to suffer a loss. For example, the roofing material used may not be able to withstand a wind force of more than 15 ...
Professional designation earned after the successful completion of three national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as ...
Investment risk associated with the changes in the earnings capability of the company. If the earnings capability declines, the company's ability to maintain the current dividend level and ...
Document providing additional medical information on an applicant. This statement is requested by the insurance company when the medical examination and/or application points to medical ...
Death without a will having been drawn. Under this circumstance, the court follows state law in deciding how the estate of the deceased is to be distributed. ...
Insurance that covers each and every loss except for those specifically excluded. If the insurance company does not specifically exclude a particular loss, it is automatically covered. ...
Have a question or comment?
We're here to help.