Business Continuation Life Insurance policies are company or organization funded and owned policies issued on the life or lives of employees whose demise would have a substantial financial impact on the surviving organization’s ability to function and prosper in its future.
The Business Continuation Life Insurance can be issued on male or female lives and typically these might be persons who have essential management, marketing, financial or technical expertise.
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Business Continuation Life Insurance policies are designed to replace the economic loss associated with deceased employees, as funding vehicles for ownership buyouts, for ownership transfer, and for various estate and beneficiaries situations.
Business Continuation Life Insurance policies are state specific and not all insurance companies offer key persons – business continuation type life insurance policies to residents of all states.
These types of life insurance policies provide permanent coverage on the life of the insured.
The premiums paid into these types of policies can remain the same for the duration of the policy.
Generally, the premiums must be paid for the policy to remain in force.
Cost for policy issuance is a function of the age(s) of the insured, their health condition, their smoking habits, the amount of life insurance coverage, and the payment period wanted.
A portion of the premium paid is credited to a cash value tax deferred cash accumulation account.
The issuing insurance company credits dividends and interest to policy owner's cash accumulation account. This rate varies from underwriting insurance company to underwriting company and changes from time to time.
Policy loans are available.
Business Continuation Life Insurance policies have a named owner, a named insured and named beneficiaries designations. These three different designations can be the same person, but in many situations they are not necessarily set up with the same designations. Which type designations to use depends on different variables and situations.
Someone or a company or an organization can be the owner of these life insurance policies on someone else's life only when he/she or a company/organization has an "insurable interest".
Most Business Continuation Life Insurance policies are issued only after a medical questionnaire and in some cases only after medical tests.
Effectively, once a Business Continuation Life Insurance policy is issued by the insurance company that policy is guaranteed without a new physical, no matter the health condition of the insured, as long as the owner pays the premiums on time.
The death benefit payable to a beneficiary upon the death of the insured is dependent on the claims paying ability of the issuing life insurance company.
Generally, the death benefit payable to a corporate or organization beneficiary is income tax free; however AMT might apply.
