Typical Group Life and Disability insurance offered to employees usually only cover a fraction of a key executive’s high income. Providing an enhanced, customized benefit package to wrap around the group plan for key executives not only protects the executive and his/her family, but also the business in the event of a sudden critical illness or death. Executive benefits can include supplemental life insurance and/or carve out disability, and plans may be structured to avoid taxation of benefits at the time of claim. Following are some more specific examples of Key-Person Executive Benefits.
Key Person (Key Man) Life Insurance is designed to protect your business should one of the main partners pass away unexpectedly. This policy will name your business as the beneficiary and premiums are billed under the business name. Benefits and premiums are tied the value you have established through financial records. Benefit payments are made to the business to help minimize financial loss should your business lose the insured (key personnel) due to death.
A Business Overhead Disability policy prevents businesses from going under from regular overhead expenses while the business owner is unable to work and run the business due to disability. These types of policies will typically pay for things like employee salaries, rent and utilities, among other expenses.
Buy-Sell Agreements are intended to protect a business after the death of a key employee. Buy-Sell Agreements (also known as Continuation Agreements) are tied to and funded by life insurance policies. The agreement sets out the details of the transfer of business interest by the key-person (or his/her estate) upon a certain triggering event–usually death, disability and retirement. The surviving or continuing business owner or partner can rest assured knowing that they will be able to purchase the key-person share without interference from other survivors of the key person and his/her estate.
An executive medical reimbursement plans is a supplemental, group executive medical expense reimbursement insurance policy. It allows employers to reimburse their key employees for medical expenses not otherwise covered by regular group health insurance. In addition to covering deductibles, this type of policy covers a range of services including prescription and over- the-counter drugs, dental and vision expenses, hospital expenses and more.