Key Person Disability Insurance
Intent:
Key Person Disability insurance provides a benefit to the company if an employee whose ability to work is critical to the success of the business becomes disabled. This benefit can be used by the entity to replace lost income generated by the employee, hire a replacement employee or anything else the entity deems prudent.
Policy characteristics:
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Benefits paid in either Lump Sum or Combination of Lump Sum and Monthly Installments
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Benefit amount is a multiple of the employee's annual compensation
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Benefits are paid directly to the entity, not the insured employee or other individual
General Guidelines:
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Insured must be an employee or an owner with less than 50% ownership in the entity
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Insured must have held the Key Person position for at least 12 months
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Business must be in operation for at least 12 months
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Coverage available through both domestic and off shore insurers
