Life insurance is used for two general purposes in a private corporation – managing risk and creating opportunities. The risk management function is satisfied as life insurance provides the corporation with a tax-free payment in the event of the death of an owner or someone vital to the success of the business. As life insurance also allows for the tax-sheltered build up of cash value additional planning opportunities are additionally created.
The primary needs for corporate owned life insurance to satisfy the risk management purpose are as follows:
Key Person Life Insurance
Any prudent business would insure its company facilities and equipment that is used in creating revenue. It follows then that the business should also insure the lives of the people that run the company and make the decisions which contribute to its profit. Any owner, manager or employee whose death would impair the future growth and success of the company is a key person and should be insured as such. Read more