Does a Key Person Policy Limit Your Own Life Insurance? #shortsfeed #finance #insurance

If a business owner takes out a policy on a valued key employee, does that reduce the employee's ability to set up their own personal life insurance policy later? Especially if that employee already has a certain human life value, would the business-owned policy use up some of their available insurance capacity? The short answer is generally no. That's the short answer. But in order to unpack this properly, we have to look at a couple other elements. Okay. So first thing, we have to understand that a legitimate business can own policies on a key person, and that it doesn't reduce that person's human life value for their own family in general, because the policy created by the business is for the business's purpose. It's the business's need that's being solved, not that individual person's need that's being solved. That individual person might have a mortgage and debts and credit cards and young children and might be the primary income earner. And so they have a valid, reasonable need of human life value for their own purposes. So that's really important to understand.