Insurance  Promote Your Business
Cost Report

Key Man Insurance- Yeah I've heard of it now tell me how it works.

Insurance to protect the life of a business Why not? Just as the death of a parent can throw a family into financial turmoil, the loss of a crucial member of a business team can put the business in jeopardy. To ensure that they can survive the loss of their most crucial employees, businesses use key man life insurance.
Key employees are those whose rare or unique abilities, knowledge, and business connections make them hard to replace but vital to the ongoing business of Business are more likely to depend heavily on certain key employees for continued profitability.

What trials would the loss of a key employee inflict upon your business? Finding and training replacements for highly specialized positions is costly and takes time. Likewise, restructuring the business to work around the loss of a vital employee takes time and money that a many small- to mid-sized businesses haven't got.
Key man life insurance, also called key employee insurance or key person insurance, provides funds in the event that a key employee dies, retires, or otherwise departs.

Rolling out benefits In the event that a business intends to provide a retirement plan for its key employee, it may be more cost effective to combine the retirement plan and the key man life insurance into a single entity: cash value life insurance policies provide life coverage, but they also build equity, which makes them a valuable asset.

Upon a key employee's retirement, ownership of the cash value insurance policy can be transferred to him, or the policy can be cashed in-"surrendered," in industry jargon-and the proceeds used to fund the retirement plan.
One type is insurance that grows in value, never losing value like some “401K” retirement vehicles is a Universal Life Insurance Policy. The cash value growth in universal life products depends on the payments that the policyholder makes into the policy, as well as on interest rates which vary, according to the finances of the insurer.

Cash value for added protection Not only does cash value in insurance entail the possibility of using an insurance policy for retirement, it can also protect a business against the loss of a key employee through means other than death. If a key employee retires prematurely or even leaves to work for someone else, the employer is at liberty to liquidate the cash value insurance policy which it held over said employee.

The cash value is certain to fall short of the death benefit which could have been supplied, but it can still provide the funds needed to replace the employee or reorganize the business.

Be the first to find this article helpful.

About the Author

Margie Wilson, People Helping People
2900 Adams St. Suite A410
Riverside, CA 92504

Contact Author: request info

If you would like to re-print this article, please contact the author.
Need some help with insurance? We can match you to an insurance professional in your local area.
Find Local Insurance Agents

Related Topics

Life Insurance - Personal
Insurance - Property - Business
Insurance - Property - Homeowners
Insurance - Flood
Insurance - Auto - Personal
Health Insurance for Individuals
Friend or Foe - Funeral Funding
A fresh way to look at your competition. Whether your in the funeral funding assignment...

Final Expense
The benefits of funeral insurance.

Five Financial Threats to Your Financial Security
Are you ready for these 5 financial threats to your financial security? Everyone will...

Arizona Wildfires
Every year, Arizona fights the blaze and unfortunately homes, personal property, acreage...

Cityscape Insurance Announces Launch, Provides Personalized Experience
CityScape Insurance believes that you aren’t just a customer, you’re family. Not only...

Need some help with insurance? We can match you to an insurance professional in your local area.

Other Related Topics

Every Small Business Should Consider Carrying Thirteen Types of Insurance
Small business should carry adequate insurance coverage regardless of the size of...

Save 15% on Your Auto Insurance
Though it sounds great and we’re all ready to cut costs where we can the question you...

Do You Know What A Good Benefit Plan Looks Like?
A good benefit plan should include a number of plans that would meet you and your...

National Flood Insurance Program
Facts about Flood Insurance. Since standard homeowners insurance doesn’t cover flooding,...

Recharged Marketing for your Funeral Home
How badly do you feel when one of your families choose another Funeral Home? What’s...

Editorial Disclaimer: The views expressed in articles published on this website are those of the authors alone. They do not represent the views or opinions of this website or its staff. The articles on this site do not constitute a recommendation or endorsement with respect to any views, company, or product. Authors affirm that article submissions are their original content or that they have permission to reproduce.

Free Cost Estimates   |   Insurance Agents Directory   |   Insurance Cost Report   |   Free Business Listing

All users of are subject to our terms of use.

Home   |   Articles & Videos   |   Affiliates   |   Networking Groups   |   Search by Category

Terms of Use   |   Privacy   |   Partner Network   |   California Do Not Sell My Info   |   About Us   |   Contact Us   |   Member Login

©2003-2020 - VentureStreet, LLC

Join Our Business Network