Key-person insurance benefits are often used to buy out the insured person's shares or interest in the company. Buy-sell agreements, which require the deceased executive's estate to sell its stock to the remaining shareholders, legally facilitate this process. Proceeds from key-person insurance can also be used to recruit replacement management.
The following form contains some critical questions you should ask your agent or broker when considering this type of insurance.
Hawaii Checklist — Key Employee Life Insurance is a comprehensive insurance plan designed specifically for businesses operating in Hawaii. This policy offers financial protection and peace of mind to employers by covering the loss of a key employee. Key Employee Life Insurance is a type of life insurance that protects businesses from the financial impact of losing a crucial employee. It provides coverage in the event of the key employee's death, helping to mitigate the potential costs and disruptions that can arise from such a loss. Hawaii Checklist — Key Employee Life Insurance caters to various types of businesses across the state. It offers different types of coverage options, including: 1. Basic Key Employee Life Insurance: This policy provides a lump sum payment to the employer in the event of the key employee's death. The amount of coverage is determined based on the employee's importance to the business and the potential financial impact their loss may have. 2. Income Protection: In addition to the lump sum payment, this type of coverage ensures a steady stream of income to the employer for a specified period. This helps the business to maintain its operations and cover expenses during the transition period after the key employee's demise. 3. Key Person Replacement: This coverage option helps offset the costs associated with finding, hiring, and training a replacement for the key employee. It covers recruitment expenses, relocation costs, and other fees incurred during the search and onboarding process. 4. Key Person Expenses: This type of coverage reimburses the employer for key person expenses incurred due to the death of a key employee. These expenses may include funeral costs, counseling services for affected employees, and other unanticipated expenses arising from the loss. It is important to note that Hawaii Checklist — Key Employee Life Insurance is tailored specifically for Hawaiian businesses and complies with the regulatory requirements of the state. Businesses can consult with insurance providers to assess their unique needs and customize their policy accordingly. With Hawaii Checklist — Key Employee Life Insurance, employers can protect their businesses from the potentially significant financial impact of losing a key employee. This insurance coverage provides financial stability during challenging times, ensuring continuity and peace of mind for businesses operating in Hawaii.
