Key Man Life Insurance Policy Plan is the life insurance given to
life and available in different format by different insurance companies. There
are some of the policies, where insurer is one person and the insurance coverage
is for another person. One such insurance policy is in the form of Key Man Life Insurance Policy. There the insurer is the managing director of a
company or an employer in one word. The insurance will be on a key person and
that is known to be the key man. You do not have the idea about the full
policy. If you have also that idea, then also the advantages or the
disadvantages of the policy is not known to you. Here are the details related
to the advantage and disadvantage of this particular policy.
Advantages in a nut shell for the company
for availing Key Man Policy cover
If
the key person dies, the company is going to get the
money back and that will help you to bear the loss, that you are incurring.
· The
investment of the company in this particular insurance policy will be getting a
deduction in income tax, under the section 37(1). This is going to add value to
the company in either way. In other way, you must make it a point that the
return from the insurance too is left out from the income tax.
· In
the income tax reduction, there is no need for additional acclamation from the
Income Tax authority. This is going to make sure that you will have to consider
less hazard while paying the premium payment. The premium value is auto
intimated to the income tax department and hence the update is automatically
made.
· The
use of this policy can be made at the time of retirement through a benefit of
superannuation or even through the ex-gratia payments. The amount that is
received, if the employee dies is free of tax, but the amount that is received
after the maturity is taxable.
· Loans
can be raised on the amount that has been paid to the company as premium and
you can pay the loan with an interest rate of 12%.
· Two
things are to be confirmed here. The first one is the turnover of the employee
has to be restricted, since the insurance company is paying that much amount
for the employee’s death. The second thing is that you will have to ensure the
loyalty for the employee too.
· For
high income executives, you can include the amount of maturity value in the
hike of their salary and thus you can save the tax amount that you will be
paying to the income tax department.
· Tax
planning, according to Key Man Life Insurance Policy is also assisted
with this insurance policy. This is the additional support that the policy is
going to give you.
·
The
directors and their families can be safe guard with the help of this insurance
policy. This is going to give the perfect support in all possible ways. The
different conditions a company faces can be avoided by this policy in the best
possible style.
·
Financial
loss and the chances of that is least in this case.
· The
loan that can be availed from the insurances can be used in the different
business related expenses of the company.
· The
premium that has been paid by the company will not be regarded as a perquisite
by any chance. To avail the support, the competent authority must be
interpreting in the entire function.
· If
you are looking for the different scopes to retain the employee in the company,
you can use this policy for the same purpose.
Disadvantages for the company
·
The
policy amount or the maturity value is not to be considered as an exempt for
the general 10 (10D) tax exemption. The premiums are not under the provision of
the Income tax exempts. However, when the policy is to be handed over to the
employee and if he pays the amount, the amount will be regarded as tax
exemption.
· If
the policy is surrendered and endorsed to the employee, the amount is taxable
under the section 17 of the IT act. The amount will be regarded as the profit
in lieu with the salary.
With all the above detail related to Key Man Life Insurance Policy, you can easily understand, how you are going to
handle the policy. This is the best support that you can avail, since all the
details regarding the advantages and disadvantages are regarded here. To get more information about this insurance
you can contact the leading broker firms of the industry dealing in different
format of insurance for life.
