Male   Female
  • How does life insurance serve business purposes?
  • June 17, 2015
  • How does life insurance serve business purposesBy LifeQuotes.com

    In the world of business, life insurance can serve a variety of purposes for both the corporation and its employees, according to the 8th edition of McGill’s Life Insurance. These important purposes include:

    -Key person indemnification

    -Credit enhancement

    -Business continuation

    -Employee benefit plan

    Key person indemnification is key when a small business relies on one person who is absolutely vital to the organization’s structure and success. In many cases, this may be a CEO or CFO of a company but may be a stockholder that holds a high level of expertise. If that individual’s loss is going to severely impact management, disrupt sales, weaken credit or repayment to the company, it is vital that financial protection is provided.

    Credit enhancement is anything that can stabilize the financial position of the company and also open the doors for lending and strong banking relationships. Let’s say a business wants to take advantage of an opportunity but needs to borrow to do so and the bank is agreeable but afraid that something could happen to the key person of this project. If that person is insured, life insurance can be used as collateral.

    Business continuation involves life insurance that a company or firm purchases to provide the funds necessary to continue business and cover the losses incurred in the event of the untimely death or disablement of someone critical to the business. This may be an owner, partner or other employee without whom the business may cease to operate. Any change in partnership can cause dissolution of the business so partners can be insured for their interest in company.

    Employee benefit plans can provide disability, income replacement and medical costs as well as death benefits. These are the group life plans and pensions. Though under most plans, the employee is not permitted to choose the amount of life insurance. Employers may also tailor variables to meet their needs.

  • Category: Articles Library, Company Profiles, Life Insurance

Leave a Reply

Archives

About

Consumer Insurance Guide SM provides a wide selection of originally-authored articles and expert advice targeted to the self-directed insurance shopper. Our mission is to provide consumers with useful, money-saving information on all things having to do with making sound insurance purchase decisions.

Consumer Insurance Guide SM is owned by Life Quotes, Inc. 8205 South Cass Avenue, Darien, IL. For editorial, content feeds, advertising and lead purchase opportunities, contact Robert Bland at bob@lifequotes.com.

Originally founded in 1984 as Quotesmith Corporation, Life Quotes, Inc. owns and operates www.consumerinsuranceguide.com and www.lifequotes.com, two online consumer insurance information services that cater to the needs of self-directed personal and corporate insurance shoppers.

About Us  |   Contact Us  |   Press Releases  |   The Best Privacy Policy  |   Life Insurance  |   Careers
For Agents & Brokers  |   Site Map  |  


Copyright ©1984-2015 Life Quotes, Inc., 8205 South Cass Avenue, Suite 102, Darien, Illinois. Life Quotes, Inc. and certain of its personnel are licensed as insurance agents, brokers or producers in all states. CA agent #0A13858, LA agent #200696, MA agent #333509159. dba Life Quotes Insurance Services in CA under agent #0827712, in LA under agent #205078. dba Life Quotes Insurance Services, Inc. in UT under agent #90093. All rights reserved. Telephone (630) 515-0170. Founded 1984.
10.1.1.84