Key Person Life Insurance:
The death of a key person will often have a devastating effect upon the
future of a business.
To protect against this sudden loss, many businesses purchase life
insurance policies on key employees.
Although the premiums are not tax deductible, the proceeds at death
are received tax free by the business.
These proceeds can fill several needs:
A. Assist in finding and training a new employee to replace the
deceased key person.
B. Fulfill any contractual agreement to continue the employee's salary
to his or her family for a certain number of months.
C. Provide the funds to purchase stock belonging to the deceased shareholder.
D. Bolster the company's credit standing.
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