Forums » Life Insurance

About keyperson , split dollar and deferred compensation plan

    • 144 posts
    March 1, 2014 11:07 PM IST
    • Key person life insurance or key employee life insurance is insurance that a business purchases on the life of a person whose continued participation in the business is necessary to its success and whose death would cause financial loss in the business.
    • Depending on the needs of the specific situation, a business might purchase either term or permanent insurance on the life of a key person.


    Life Insurance as an Employee Benefit:

    • Businesses often use insurance products to provide for their employees.
    • Individual insurance products are also used in certain instances to provide employee benefits for selected classes of employees.
    • There are two types of individual life insurance benefit plans:


    • Split-Dollar Life Insurance Plans:



    a)      A split-dollar life insurance plan is an agreement which a business provides individual life

    insurance policies for certain selected employees, who share in paying the cost of the policies.


    • Deferred Compensation Plans:



    a)      A deferred compensation plans is a plan establishedby an employer to provide income

    benefits to an employee at a later date, such as after the employee’s retirement, if the

    employee does not voluntarily terminate employment before that date.

    This post was edited by T Ghosh at March 1, 2014 11:07 PM IST

(200 symbols max)

(256 symbols max)