Key-Man Insurance

Key man insurance is simply life insurance on the key-person in a business.

In a small business, this is usually the owner, the founders or perhaps a key employee or two. These are the people who are crucial to a business--the ones whose absence would sink the company. You need key man insurance on those people.

As an employer, you need to make sure you follow IRS guidelines to get the maximum tax benefit from key man life insurance. Generally, the death benefit of a life insurance policy is tax free when the premium is paid with after-tax dollars, although premiums are not deductible.

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