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.
Wisconsin Checklist — Key Employee Life Insurance is a comprehensive insurance plan designed to provide financial protection to a business in case of the death or disability of a vital employee. This type of insurance is crucial for businesses in Wisconsin, as it helps mitigate the potential threats to their operations and financial stability. Key employee life insurance in Wisconsin serves as a safety net for businesses by compensating for the loss of income, expertise, and experience that comes with the untimely passing of a highly-valued employee. It enables the business to continue its operations smoothly, ensuring minimal disruption and allowing for a seamless transition during difficult times. There are various types of key employee life insurance policies available in Wisconsin. Some common ones include: 1. Key Person Insurance: This type of policy focuses on the protection of a specific individual whose loss would significantly impact the business. It covers the costs associated with finding and training a replacement, loss of revenue, and potential financial liabilities. 2. Business Continuation Insurance: Also known as buy-sell agreement insurance, this type of coverage ensures that the remaining business owners have the funds needed to purchase the shares or interests of a deceased or disabled key employee. It helps in maintaining stability within the business and protects the interests of all stakeholders. 3. Executive Bonus Plans: These plans are offered as an additional incentive to key employees, encouraging them to stay with the company long-term. The company pays the premiums for the key employee's life insurance policy as a bonus, allowing the employee to build cash value and provide financial protection. 4. Split Dollar Plans: This arrangement involves sharing the costs and benefits of a life insurance policy between the business and the key employee. It helps the employee obtain affordable coverage while providing the business with a means to recoup its premium payments in the future. When considering Wisconsin Checklist — Key Employee Life Insurance, there are several key factors to keep in mind. It is essential to assess the value of each key employee to the business and determine the appropriate coverage amount required. Factors such as age, health, and job responsibilities play a significant role in determining the premiums and coverage options available. Furthermore, it is important to review the insurance policies regularly to ensure they accurately reflect the current needs of the business and its key employees. As businesses evolve, it may be necessary to modify coverage to align with new goals and objectives. In conclusion, Wisconsin Checklist — Key Employee Life Insurance is a vital tool for businesses seeking to protect themselves from the financial consequences of losing a key employee. By understanding the types of coverage available and assessing the specific needs of the business, Wisconsin businesses can secure adequate protection to maintain continuity and minimize the impact of unexpected events.
