Key Man Life Insurance
Posted in Key Man Life Insurance 9 months ago, 2 replies
submitted by Jerry in Palm Harbor, FL
Yes they can transfer it to the employee but they better obtain key man insurance on his replacement or the whole purpose of why it was obtained in the first place will be lost. What about any tax effects to the key man. Do not forget the employer has deducted all those premiums and now the employee is getting the benifit. This is differant from most situations where the premium is not deductable
A secondary benefit is that many of these policies are set up as equity building whole life, with a benefit to the key man of surrendering the policy and giving the equity to the key man at retirement.
The company owns the policy, pays the premium and is beneficiary of the policy.
There should be no reason why the company can't pass the life insurance policy to the key man. You must change ownership, beneficiarries and have the person begin paying the premiums themself.
Also, if your company has any mention of this policy in the charters or agreements, you would want to ammend that this benefit no longer exists from the company.
email me at dhorsey@myclearview.com if you have questions.
David J. Horsey Jr., CLTC
Clearview Insurance & Financial Services