Key person insurance is also known askey man insurance. It is considered as an important aspect ofbusiness insurance. It has no legal definition. In simple words, you can describe it as a kind ofinsurance policythat is taken out easily by business in order to compensate business. It is so for all those financial losses that is the result of someones death. The key man Insurance is a type of standard life insurance. Policy of trauma insurance is used very well for the succession of business or for other purposes of protection.
Key person insurances are regarded as something more than just a kind of insurance policy. This term does not only include the basic or actual insurance. It also has some insurance tagged with it for so many business purposes.
These purposes include protection of revenue, protection of debt and shareholder insurance.
Who can be perfect for key person?
If someone faces a loss and this loss becomes the cause behind financial strain in terms of his business then he will be perfect to become a key man or insurance key person. This key person is directly associated or linked with the company. For instance, if the person is a director in any company, sales person, project manager or a partner then he can easily be an insurance key person.
Ownership of insurance policy:
You can own these key person insurance policies by following a number of ways. It all depends upon the business needs of a person. It is considered very common to own a policy for a business man. He can easily claim all the proceeds and pay directly to his company. No insurable or legislative is required in order to own a policy by special entity.
There are so many benefits of having key person insurance. Below mentioned are some top common benefits of this type of insurance. Have a look!
- If the key man of a company or business dies then a great amount of money is paid to the company in order to deal with the loss.
- In United States of America, if a company goes on buying key person insurance in terms of any of its employee then the company can easily claim for premium deductions.
- Another plus point tagged with this type of insurance is that it can give an advanced intimation to all those authorities that are attached to the income tax.
- If a companys employee or any other person related to that business goes for this insurance policy then that company or business can easily raise multiple loans.
- This key person insurance policy can definitely be used in the form of a salary hike and other savages in term of income tax. It is done for the executives to earn a high range of salary.
- As for tax planning, this insurance is very good as it helps a lot here.
- The directors of any company can safe or you can say protect their company from any kind of possible damage or harm.
- Retention is improved a lot when it comes to the key human resources tagged with any other company or business. This retention is improved with the help of this key person insurance policy.
Key man insurance disadvantages:
Same like all other insurance policies, this insurance also has some negative points attached with it. Have a look!
- Endorsed amount of money is easily being taxable in key mans hands in the form of profit, in cases where the insurance policy is surrendered.