Key Person Insurance For Small Business
Key person insurance is a life insurance for businesses.
Key person insurance for small business. If an insured employee or owner were to pass away or become disabled and unable to work the benefits payable from a key person life or disability insurance plan could help you. Key person insurance overview. Read up on on how key person insurance might benefit your business and learn whether it s tax deductible. Your company relies on that person for a chunk of its income.
When a business buys a policy the business is both the policy owner and the beneficiary. To purchase life insurance on a key person a business must have an insurable interest in the key person s life. Key person insurance is a type of life insurance that helps compensate a business if the owner or main employee dies. A life insurance policy that a company purchases on a key executive s life.
Any business large or small may need key person key man insurance. The company is the beneficiary of the plan and pays the insurance policy premiums. With this type of insurance coverage the business may survive the absence of the owner or continue on when a key employee dies. Key person insurance helps your business recover from the loss or disability of someone who is invaluable to your company.
For example a small business owner may choose to take out a policy on himself and make the business the beneficiary. A key person insurance policy can also be used as a guarantee for business loans. If that happens the insurance would help pay off any balance. During the time immediately following an unexpected loss key person insurance will kick in to help cover expenses while the business regroups.
Benefits of key person insurance. For taxation purposes the policy can be used to claim a deduction on business taxes under the category of business expenses. Key person insurance policies for small businesses. Key person life insurance.
This means that the business must face a risk of a substantial financial loss if the key person dies. So let s say you have a top salesperson who s making you a lot of money. Additionally the policy can be put toward shareholdings or partnership interests. Lenders may consider calling a loan if a key person in a business dies.
If you are starting with a small business your focus is likely to be on pressing matters such as getting your product or service out hiring the right people managing your expenses and paying the bills.
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