Key Man Insurance Policy Definition
A keyman insurance policy protects the financial interests of the business if its key employee dies prematurely.
Key man insurance policy definition. There is no legal definition. Key man insurance is an insurance policy taken out by a small company on the life of a. The former is also the beneficiary of the policy. In the case of a life insurance policy it is a term insurance covering the life of the employee.
Keyman insurance defined keyman insurance can be defined as an insurance policy where the proposer as well as the premium payer is the employer the life to be insured is that of the same employer s key employee keyman and the benefit in case of a claim goes to the employer. An employer takes out an insurance policy insuring against loss of profits arising from the death sickness or injury of a key employee. In general it has the following features. 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.
Key person insurance also called keyman insurance is an important form of business insurance there is no legal definition of key person insurance. 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. 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. Key man insurance definition.
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. A key man can be anyone directly associated with the business whose loss can cause financial strain to the business. A life insurance policy that a company purchases on a key executive s life. 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.
The business is the beneficiary under the policy. Key man insurance is an important form of business insurance. It is also referred to as the key man insurance or key employee. The company is the beneficiary of the plan and pays the insurance policy premiums.
Life insurance on a key employee partner or proprietor on whom the continued successful operation of a business depends.
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