Key Man Insurance Policy Definition
Key man insurance is an insurance policy taken out by a small company on the life of a.
Key man insurance policy definition. The business is the beneficiary under the policy. An employer takes out an insurance policy insuring against loss of profits arising from the death sickness or injury of a key employee. A key man policy can also be used as an employee benefit since the life insurance policy can be transferred to the executive or insured employee by the company. A life insurance policy that a company purchases on a key executive s life.
The company is the beneficiary of the plan and pays the insurance policy premiums. It is also referred to as the key man insurance or key employee. Key man insurance definition. The beneficiary is the employer.
Though key person life insurance premiums aren t tax deductible the proceeds of the policy are usually provided to the company free of income tax. Meaning pronunciation translations and examples. A key man can be anyone directly associated with the business whose loss can cause financial strain to the business. A keyman insurance policy protects the financial interests of the business if its key employee dies prematurely.
The former is also the beneficiary of the policy. Though the policy cannot replace the loss of skill it can provide the business with the funds to deal with the loss and replace the employee with another. Life insurance on a key employee partner or proprietor on whom the continued successful operation of a business depends. Key person insurance is a life insurance policy taken out by an organization or business on the life of a key executive employee partner or proprietor to protect against the loss of value revenues or profits of the business.
Key man insurance is an important form of business insurance. In general key man insurance can be described as an insurance policy taken by a business to compensate that business for financial losses arise from the death or. In general it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business. In the case of a life insurance policy it is a term insurance covering the life of the employee.
In general it has the following features.
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