Business insurance
Key person insurance is life or disability coverage a business buys on an owner or employee whose loss would seriously hurt revenue or operations. The business owns the policy, pays the premium and is the beneficiary, using the proceeds to recruit a replacement, cover lost profits or reassure lenders and customers.
Sizing key person coverage combines income-based and business-based methods: a multiple of compensation, the person's share of profit, or the cost of replacing them. Employer-owned life insurance must meet the notice and consent requirements added to the tax code by the Pension Protection Act of 2006 for the death benefit to keep its tax-free treatment.
The key person calculator does this math with the prospect's own numbers. The human life value calculator already models the present value of a person's future earnings, and a business owner who uses it is often thinking about the business as much as the family.
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