Key Person Insurance

Where a Key Person Insurance Plan Really Fits

Every business has a “key person” – large business or small. It may the owner him/herself, or a non-owner employee. Where does it make the most sense to install a key person life policy? Here are the two scenarios and the accompanying reasons:

Owner/Employee

• When the primary motivation for the coverage is to meet business rather than personal needs such as loan repayment or operations, key person coverage can be more efficient than personal coverage.
• When having the business recover its costs – and possibly more – from the policy is important.
• When money is needed to fund a redemption-style buy-sell agreement.
• When the business income tax bracket is lower than the personal bracket.

Non-Owner Employee

• This coverage can informally finance a non-qualified employee benefit agreement between employer and employee.
• When the employer’s control of the coverage is more important than any other consideration, this type of structure fits best.
• When having the business recover its costs is also important.
• When the primary motivation for the coverage is to meet business needs rather than the employee’s personal needs.

To summarize, whether it covers the business owner or a key employee non-owner, key person life insurance can act as a true “shock absorber” in the event of an untimely passing. It is the utmost definition of “pennies-on-the-dollar” indemnification!

Our Life Insurance Expert

James P. Cahill, CLU

James is a 40-year veteran of the life insurance marketplace in the Greater Chicago area.  His career has included a 22-year association as a branch manager and senior account executive with Hartford Life, earning top national office and top national account executive designations, while qualifying for award-conference level in 20 of those 22 years.

Our value proposition is a simple one.  Offer a thorough and cost-effective solution to business clients through careful analysis, consultation and implementation.

Contact James at info@GoCGO.com.