A qualified retirement plan for self-employed individuals or unincorporated businesses, also known as an HR 10 plan, which allows for tax-deferred contributions and potential tax deductions.
Key Person Insurance
[kee pur-suhn in-SHUR-uhns]
What is the definition of Key Person Insurance?
A type of business-owned life insurance contract that is taken out on the lives of principal officers or essential employees of a company, providing guaranteed death benefits to the company and potentially accumulating a cash surrender value.
Using Key Person Insurance in an Example
A technology startup took out key person insurance on their CEO, who was crucial to the company's innovation and funding. This policy helps mitigate the financial risk to the company in the event of the CEO's unexpected death, ensuring that the company has the necessary funds to manage the transition and sustain operations.
Using Key Person Insurance in a sentence
During the board meeting, the CFO suggested reviewing the key person insurance policies to ensure that all critical roles were covered adequately in light of recent organizational changes.
Related Terms
Key Employee
In the context of top heavy plans, a key employee is defined as 1) an officer of the employer earning more than $130,000; 2) an individual who owns more than 5 percent of the employer; or 3) an individual who owns more than 1 percent of the employer and has compensation greater than $150,000.
Key Industry
An industry of primary importance to a nation's economy, often critical for its infrastructure, economic stability, and growth.
Kiting
Kiting is a fraudulent banking practice involving the issuance of checks from an account without sufficient funds, with the expectation that deposits will clear before the checks are processed. This practice exploits the float time between the check being written and its clearance. Kiting can also refer to manipulating the face value of a check or inflating stock prices through deceptive trading strategies.
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