Top of Insurance Policies
Key man insurance can either be:
- A Life insurance policy
- Or a critical illness insurance policy
– that would not extend beyond the period of the key person’s usefulness to the business
This insurance is used as part of the business succession plan or for the protection of the business.
A Key person insurance policy is owned by the business and the goal is for the benefit to compensate the business for losses incurred should a key person pass away or become permanently disabled.
An additional benefit for private companies is that the life insurance proceeds can be paid out as a tax-free dividend to the owners once the business has recovered.