For many businesses, especially small businesses, the death or serious injury of the owner and founder can be devastating. To help address this issue, many companies purchase key man life insurance as protection. This type of policy may also be referred to as key person life insurance. Evans, Ewan & Brady Insurance Agency in Georgetown, Texas serves the insurance needs of the entire state of Texas, including offering key man life insurance.
What is key man life insurance?
Just like a personal life insurance policy, a key person life insurance policy protects your business in the event that a key employee, such as a top executive, is seriously injured or dies. The death benefit can help your company weather this loss, providing financial assistance during the search for a replacement. A key man policy is also an asset that boosts creditworthiness and has a cash value that can be accessed if needed. Your company pays for the policy and is the beneficiary should the insured key person die or become unable to perform their job.
When a person is vital to the day-to-day workings of a business, like an owner or founder, it can be devastating to the business to lose that individual. A key person life insurance policy can provide continuity, reassuring clients and creditors that the business remains in good standing. It can also provide the remaining employees the time and money to properly replace the lost leadership, ensuring the business continues to operate.
How is key man life insurance different than other forms of life insurance?
The main difference between a key man life insurance policy and a term life or a whole life insurance policy is that a business is the owner and beneficiary of the policy, not the person who is insured. Term life insurance covers an individual for a limited period of time, while a whole life policy offers lifelong coverage. Typically, whole life policies cost more. Most key man policies are purchased for a set term, such as 10 or 20 years, just like a personal term life insurance policy.
Unlike a whole or term life policy, the individual does not determine the beneficiary of the policy, but they must be notified that the business is purchasing the coverage. You will need to consider which employees should be covered under this type of policy. Premiums on a key man life insurance policy are not tax-deductible for the business. Finally, there are additional tax implications for a company purchasing a key person policy on an employee. It is important to consult with your tax professional to ensure that you comply with all the necessary documentation and requirements.
Is key man life insurance right for your business?
If you’re a business in the greater Austin area, including Travis, Bell, and Williamson counties, Evans, Ewan & Brady can assist you in determining if a key person life insurance policy is right for your company. At Evans, Ewan & Brady, we make sure our clients are educated about all their insurance options and help them understand what policy is right for them. We will find the best coverage and rates available.
Call Evans, Ewan & Brady today at 512-869-1511 and see how we can help protect you and meet all your insurance needs.