may have several aspects, such as size, stability, and industry. For example, group life insurance products may require a minimum number of participants in order to avoid claims that are inadvertently skewed higher because of a few individual substandard risks.
Underwriters are also concerned about stability. It is important to know how long the group has existed, how often the group switches providers, and what is the group's unifying characteristic. Individual turnover is less important.
Unlike in an individual plan, the departure of an individual, does not mean the policy is cancelled. Instead, the sponsor and the insurer may drop one employee and pick up another. Also, the sponsor is doing some of the administration
Key persons are employees whose contributions have a significant impact on the revenue and profitability of the company, especially in small businesses.The key employee contributes substantially to the success of a company. They are typically:
Part of the management team
More highly paid
Respected by customers, creditors, suppliers, and vendors
Have direct responsibilities for sales, production, or service
The life insurance proceeds from a key person life insurance policy provides the necessary funds to recruit, hire, and train a replacement employee, restore lost profits, and reassure customers that the business operations will continue. Either term or permanent coverage can be used to fund the plan.