Key Man Life Insurance Policies
Do you know life insurance can protect your business too? There is one type of insurance which protects your business called Key Man Life Insurance Policies.
Key man life insurance, which also is known as corporate-owned life insurance or COI, is designed to protect your business. According to research, 22 percent of small-company owners have a key man life insurance policy.
This insurance is purchased by the business owner for the employees. It is for salespeople, executives and other employees who have a role in decision making and whose sudden loss would be difficult for the company to replace quickly.
Length of Coverage for Key Man Life Insurance Policies
There is no length-of-coverage formula for key man life insurance policies. If you are a sole proprietor, you will need enough coverage to make up for the loss of revenue generated by the loss of the employee or employees and the cost of finding and training replacements.
Features of Key Man Life Insurance
- The death benefit can be used to recruit and replace the covered key employee.
- Cash value might be available for your business through a withdrawal or loan in case of emergency.
- The business will pay the premiums but they are non-deductible..
- The cash value buildup can be used as an incentive for the employee to stay with the company.The longer the employee stays, the more the policy ownership reverts to him or her.
The cost of key man life insurance policies depends upon:
- The type of policy purchased
- The death benefit in the policy
- The health and lifestyle of the employee or employees covered