Protecting Your Business Against
the Loss of a Key Employee
If the success of your business depends on a few key people…
Key person life insurance can help ensure that your business continues to be successful, even if you lose their expertise.
|Business purchases life insurance policy on key employee||Life insurance company issues policy covering key employee||At death of key employee, income tax-free death benefit paid to business1|
The advantages of this strategy:
- Life insurance lets you reduce, or even eliminate, some of the risk your business may face following the death of a key employee.
- The costs, expenses, and potential loss of revenue resulting from the death of a key employee are no longer unexpected or unmanageable.
- Funds are available to hire and train a new employee
- The plan is completely selective – cover only those employees you feel are most important to the opening success of your business.
- Life insurance benefits are received income tax-free by the business.1
When the financial soundness of your business is threatened by the death of a key person…
Key person life insurance can provide the protection your business needs to keep going.
Here’s how it works:
- You and your life insurance professional determine the financial impact the loss of a key employee will have on your business
- Your company buys, owns, pays the premiums on, and is the beneficiary of a life insurance policy covering the employee’s life.
- At the death of the key employee, the life insurance policy pays your company an income tax-free benefit.1
Permanent life insurance
- Death benefit helps keep lines of credit open following the loss of an owner-employee or key employee;
- Provides funds to replace and train an employee wit specialized skills and expertise;
- Helps assure completion of ongoing projects and initiatives; and
- Provides access to policy cash values through loans and withdrawals, which your business can use to meet unexpected business expenses.2
1 Assuming the disclosure and consent requirements of IRC 101j and 6039 are met prior to issuance of the policy
2 Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Surrender charges may reduce the policy’s cash value in early years.