KEY
PERSON * Most
businesses have one or more so-called “key person.” These are employees
whose services are especially crucial in connection with the income or profits
of the business. To the extent that there is such an employee, it is obvious
that the premature death or the total disability of that key employee could have
disastrous effects upon the earnings of the business. Equally obvious is the
fact that life insurance on the life of the key employee, the insurance being
owned by the business and with the business the beneficiary of the policy, is
prescribed. Then, following the premature death of the key employee, the
insurance proceeds serve to reduce substantially the otherwise severe financial
loss to the business. Similarly, the business would want to purchase disability
income insurance on the life of the key employee, with the business names as
beneficiary of the policy.