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Key Person & Long-Term Care Insurance Guide

The Key Person policy protects businesses from the financial impact of losing essential employees by covering revenue loss and recruitment costs, while also serving as a retention tool. Long-Term Care Insurance provides coverage for long-term care services not included in traditional health insurance, with benefits triggered by the inability to perform daily activities. Both policies have pros and cons, including potential high costs and the challenge of replacing unique skills or unused benefits.

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17 views6 pages

Key Person & Long-Term Care Insurance Guide

The Key Person policy protects businesses from the financial impact of losing essential employees by covering revenue loss and recruitment costs, while also serving as a retention tool. Long-Term Care Insurance provides coverage for long-term care services not included in traditional health insurance, with benefits triggered by the inability to perform daily activities. Both policies have pros and cons, including potential high costs and the challenge of replacing unique skills or unused benefits.

Uploaded by

Blister Count
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Key Person policy

• Key person policy is essential for business as it helps


mitigate the risk of a key person being unable to work
for them
• It cover potential revenue loss, recruitment costs, and
other business disruptions.
• Business is the beneficiary and pays the premium
• Is also used to retain such people in the company
Pros
• Provides funds to mitigate the financial impact of losing
a key individual
• Covers expenses associated with finding and training a
replacement.
• In many jurisdictions, the death or disability benefits are
tax-free.
Cons
• Premiums can be expensive, especially for older or
higher-risk individuals.
• Covers only the loss of a specific key person, not
general business risks
• While financial support is provided, replacing a key
person’s unique skills may still be difficult
Long term care
• Long-Term Care Insurance is a type of insurance
designed to cover the costs of long-term care services
which are typically not covered by traditional health
insurance
• It covers services like in-home care, adult daycare,
assisted living, skilled nursing care, and hospice care.
• Benefits are typically triggered when the policyholder
can no longer perform a specified number of ADLs
• Are of two types Traditional and Hybrid
Pros
• Covers a wide range of care options, including in-home
care, assisted living, and nursing homes
• Prevents depletion of personal savings or assets due to
long-term care costs
• Offers various care options to suit the policyholder’s
preferences and needs.
• Ensures benefits keep pace with rising healthcare costs
(if this option is selected).
Cons
• Policies can be expensive, particularly with inflation
protection or if purchased later in life
• Some policyholders may never use the benefits, making
the premiums seem wasted.
• Insurers may raise premiums over time, making it less
affordable for policyholders on a fixed income

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