Key Person insurance is a specific type of coverage owned by the employer,on an employee, for the benefit of the corporation. That said, if it were a life policy, the premiums are not tax deductible, but the death benefit is tax free and goes into the CDA. However, Key Person DI does not have the benefit of tax free status, and the income is considered taxable profit tot he company. To further confuse things, a recent tax ruling seems to say that the courts are interpretting the premium as a taxable benefit to the employee… http://www.jamiegolombek.com/printfriendly.php?article_id=1113 if this link is accurate. It appears that key person DI is so fraught with tax issues, it is no wonder that it is rarely sold.
Also, there is no way a carrier will pay a large lump sum like this on a DI case. There are simply too many opportunities for abuse – and frankly too many motivations. Company not doing as well as expected? Key person develops a “stress” claim. If you want to have some form of protection against “Key Person” disabilities, probably your only option will be CI – or perhaps a specialty carrier. Key Man DI does exist – but not as a lump sum and I do not see it happening
The simple reason why so little Key Person DI (or any living benefits products) are sold is because of the non existent training offered by our industry and the dream world carriers live in. What the carriers SHOULD do is hold seminars in large centers and invite only those with SIGNIFICANT LB experience – absolute minimum 10 years and I would prefer 20 – to get a proper design for an industry-wide training program – which will also include company reps so we do not repeat the fiasco we had with CI – no awareness that clients have budgets – too much emphasis on ROP – not enough training on WHY ROP is not needed to sell the product – a common vocabulary for group and individual DI products – Group does not sell “own occupation” and should NEVER use that term in its definitions – etc. I could go on for hours but I think you get my points
Outlook for global equity and fixed-income markets
JoanneMcD
Key Person insurance is a specific type of coverage owned by the employer,on an employee, for the benefit of the corporation. That said, if it were a life policy, the premiums are not tax deductible, but the death benefit is tax free and goes into the CDA. However, Key Person DI does not have the benefit of tax free status, and the income is considered taxable profit tot he company. To further confuse things, a recent tax ruling seems to say that the courts are interpretting the premium as a taxable benefit to the employee… http://www.jamiegolombek.com/printfriendly.php?article_id=1113 if this link is accurate. It appears that key person DI is so fraught with tax issues, it is no wonder that it is rarely sold.
Saturday, February 11 @ 5:50 pm //////
LTCI #1
Also, there is no way a carrier will pay a large lump sum like this on a DI case. There are simply too many opportunities for abuse – and frankly too many motivations. Company not doing as well as expected? Key person develops a “stress” claim. If you want to have some form of protection against “Key Person” disabilities, probably your only option will be CI – or perhaps a specialty carrier. Key Man DI does exist – but not as a lump sum and I do not see it happening
Monday, September 12 @ 2:09 pm //////
LTCI #1
The simple reason why so little Key Person DI (or any living benefits products) are sold is because of the non existent training offered by our industry and the dream world carriers live in. What the carriers SHOULD do is hold seminars in large centers and invite only those with SIGNIFICANT LB experience – absolute minimum 10 years and I would prefer 20 – to get a proper design for an industry-wide training program – which will also include company reps so we do not repeat the fiasco we had with CI – no awareness that clients have budgets – too much emphasis on ROP – not enough training on WHY ROP is not needed to sell the product – a common vocabulary for group and individual DI products – Group does not sell “own occupation” and should NEVER use that term in its definitions – etc. I could go on for hours but I think you get my points
Saturday, August 27 @ 5:39 pm //////