How can a business benefit from key-person insurance?
Generally, key-person insurance is purchased by a business to cover a premature death of a business owner, and the proceeds of the policy can be used to pay for a search to find a replacement, to fund a survivor income plan or to retire bank debt. If it’s a public company the proceeds may help stabilize the stock of the company, because the loss of a key person can cause a lot of volatility in the trading of a stock. What new key-person insurance underwriting requirement should people be aware of? Corporate-owned life insurance has driven production in life insurance policies where the corporation is the beneficiary and uses the proceeds to fund corporate liabilities and other benefit programs. This aggressive sale of corporate-owned life insurance has caught the eye of the SEC and IRS. There is now a new requirement when one writes a key-person policy that the insured has to sign a statement acknowledging that he or she understands what the purpose of the insurance is and that he or s
