Key Person Life Insurance
Key Person
The easiest way to think about key person insurance, is that a business is buying insurance on the CEO. If the CEO of a large company were to suddenly pass away, or to become disabled the company would need to quickly hire and train someone else to fill the position.
By having a key person insurance policy, the business is able to have the money that they need to quickly recruit, hire, and train the new CEO. Key person does not have to be on a CEO, it can be on any employee who is key to the business. If you have a software company, and there is a one developer on your team who understands the system inside and out, and no one else quite understands it as fully as they do, they are a key person to the business. You might want to purchase key person Insurance on your developer. This way you can have money needed to find and replace your key person if they die or become disabled.
The biggest take away for your test:
What’s also really important to understand is that this is a policy that was started by the business, paid for by the business, owned by the business, and the business is a beneficiary. The key person only gives their consent to have a policy written on them, but they are not involved in paying for the policy, benefiting from the policy, nothing.
Business – has all rights & ownership:
- Policy is started by the business
- Paid for by the business
- Owned by the business
- The business is a beneficiary
Key Person – only gives their consent to have the policy written on them but:
- They do NOT pay the premium
- They do NOT benefit from the policy
- Do NOT get to choose beneficiary
Recommended: Gold
The GOLD Course is ALWAYS the recommended class series for all students as it teaches the material in more depth. Over 30 hours of the most in depth classes with a more intensive teaching of the topic. Learn more about L&H GOLD
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