How does a key man or person life insurance policy benefit your company?

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. Key Man policies are not restricted by government guidelines so you get to determine who the business would like to insure.

This type of policy helps protect the companies owner and the other employees in case of the death of the highly valued employee or owner. Savvy business people understand the importance of Key Person plans in there overall planning objectives along with long term business succession since the key man could be the person who the business will be sold too.

The business buys a term life insurance policy on the life of the key employee or possibly a cash value policy. premiums will come from the business and they will be the beneficiary of the death proceeds. 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.

How do you know if you need this type of policy or plan to help protect your business?

Ask yourself the following questions to help determine if this type of coverage makes sense for your organization and situation.

• Could your company withstand the loss of one or more of your key employees from a sudden death or accident?
• How long and how much would it cost to replace your number one salesperson or sales manager?
• How would your clients react to the death of the key employee, what if you lost your valued employee to your competition. would the customers that your key person handles follow him or her?

Depending on how you answered the questions above should give you a good idea if you or your company needs to look into this type of coverage for one or more of your most valuable employees.

How does Key Person Insurance help you or the company when the policy is needed? This type of plan will give your business cash flow when it is needed, customers may leave for a competitor, your creditors will feel more at ease and you have money to hire a replacement.

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). Your creditors will be able to relax knowing that your business has cash on hand for liabilities. Key Man programs are easy to set up with very little reporting requirements with the IRS.

This entry was posted on Wednesday, October 1st, 2008 at 9:48 pm and is filed under Other. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.