What Is Key Person Life Insurance?
It is often said the most valuable assets of any successful business are its employees. The death of a key person may be a devastating blow to any business, but for a small to medium sized business this loss can have a substantial impact on the business financially.
Key Person Life insurance (Keyman Life Insurance) helps reimburse a business for economic loss when a key employee or owner dies. The insurance covers the life of an employee who is critical to the success and profitability of the business. Key employee life insurance is not a specific type of policy, but is a way to use life insurance to offset a business risk. With business life insurance, the company owns the life insurance policy, pays the premiums and is the beneficiary of the policy. At the death of the insured key employee, the business receives the life insurance proceeds free from federal income taxes. (Assuming the policy complies with the Pension Protection Act of 2006).
Reasons for Business Life Insurance
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