March 1, 2014 11:07 PM IST
- Key person life insurance or key employee life insurance is insurance that a business purchases on the life of a person whose continued participation in the business is necessary to its success and whose death would cause financial loss in the business.
- Depending on the needs of the specific situation, a business might purchase either term or permanent insurance on the life of a key person.
Life Insurance as an Employee Benefit:
- Businesses often use insurance products to provide for their employees.
- Individual insurance products are also used in certain instances to provide employee benefits for selected classes of employees.
- There are two types of individual life insurance benefit plans:
- Split-Dollar Life Insurance Plans:
a) A split-dollar life insurance plan is an agreement which a business provides individual life
insurance policies for certain selected employees, who share in paying the cost of the policies.
- Deferred Compensation Plans:
a) A deferred compensation plans is a plan establishedby an employer to provide income
benefits to an employee at a later date, such as after the employee’s retirement, if the
employee does not voluntarily terminate employment before that date.
This post was edited by T Ghosh at March 1, 2014 11:07 PM IST