Many businesses are faced with the challenge of avoiding the loss of key employees. In fact, losing a key employee could result in incurred costs and expenses associated with replacing that employee as well as lost revenue due to the loss of the key employee’s experience and expertise. One of the best financial strategies to combat this challenge is purchasing critical illness insurance on a key employee to protect your company from suffering a financial loss of a key employee suffered a critical illness. Your company could then offer to share the benefits of critical illness insurance with the key employee through a shared ownership agreement.
Shared ownership of critical illness insurance means you share both the costs and benefits of a critical illness insurance policy. Your business pays for the basic benefit of the policy, while your key employee pays for the return of premium benefit. In the event your key employee does not suffer a critical illness or stays with your company until retirement during the term of your agreement, this key employee is eligible to receive a return of premium benefit equal to the cumulative premiums both your company and he or she paid. In terms of dollars and cents, this key employee could receive a benefit of up to $153,450 (which is the cumulative amount of combined premiums paid by your company and the key employee). On the other hand, if your company’s key employee suffers a critical illness during the term of your agreement and lives through the survival period, your company will receive a tax-free benefit of up to $250,000 for your own purposes and/or to make a payment to your key employee.
To find out what works best for your company, contact us. We can show you how critical illness insurance can help protect your business.