Key Man “Person” Life Insurance - Does your Business need it?
Key Man Life Insurance will supply your business with cash when you need it the most? A key man life insurance is exactly what the title says it is, it protects the life or lives of key employees that work for your organization. Whats nice is if you are the business owner you are also a key man or employee so you may be eligible for coverage on your own life.
The business buys a term life insurance policy on the life of the key employee or possibly a cash value policy. the company will fund the policy and they will also own and be the beneficiary. Upon the death of the covered employee the company will receive the death benefit proceeds from the policy. The monies are typically used to offset any decreased revenue, pay bills, hire new and qualified replacements and to fund a benefit for the deceased’s family.
What are the advantages of a Key Man Life Insurance policy? Business gets to select which employees are included in the plan. Life insurance proceeds are distributed income tax free to the business (typically). Creditors and clients can relax that the continuity of the business is intact. You don’t even need to submit this plan to the IRS for approval and the plans are very easy to set up.
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