Key Person Insurance

Key Person Insurance: The purchase life insurance on the key individual(s). You are the beneficiary of the life insurance policy and apply for and own the policy. If the key employee dies prematurely, the policy pays out to you. Tax-free funds from the policy can be put towards finding, hiring, and training a replacement employee. These funds can also be used as compensation for lost business during the transition and financing timely business transactions. The policy can be transferred to a departing key employee as a retirement benefit, or to a different key individual upon the retirement of the original key employee. The policy can be used to buy out the key employee’s shares or interest in the business.