Key person life insurance is simple to implement.  It does not need IRS approval and may include many people.  Your business can be protected with a death benefit providing for cash flow, retirement benefits and unexpected expenses.

What is Key Person Insurance?

An insurance policy taken out by a corporation on the life of a key empoyee to protect the business in case of sudden death.  the key employee can be anyone in teh business whose loss would have a significant impact on the company and could result in a loss of business.  Owners, partners, employees with kowledge and abilities contribute to the company.

How Does it Work?

Tax Implications?

In most situations, the key person arrangement benefits the business and the only involvement that the executive has is being the insured.  The business does not receive an income tax deduction on the premium paid.  However, the company will receive the death benefit fre from income taxes upon the death of the insured.  If the business is a C corporation there may be a potential for alternative minimum tax.