KEY-MAN INSURANCE

SOURCE : PUBLIC RULING 2/2003 "KEY-MAN" INSURANCE

 

CRITERIA

1 To recover moneys to replace loss of profits due to death, critical illness, sickness, accident or injury

2 On life of "key" person, director and employee whose absence result in reduce profits

3 Insurance proceeds remain with the employer or company and is not payable to the "key-person" or his family

4 The policy has no element of investment

 

SUMMARY

Type	Term life	Accident	Wholelife	Endowment
Nature	No return of premium	No return of premium	Cash value	Cash value and lump sum payment upon maturity
Investment elements	No	No	Yes	Yes
Deductibility	Against gross income	Against gross income	Not deductible	Not deductible
Proceeds	Taxable on company	Taxable on company	Not taxable	Not taxable

 

CONTROLLED COMPANY, PARTNER OF PARTNERSHIP, SOLE-PROPRIETOR

If on life of director or employee own shares in the company NOT ALLOWED.

Because there are other motives ie for the advantage of the director or employee in the capacity as shareholders of the company.

 

 

Controlled company Section 2(1)

A company having not more than fifty members and controlled, in the manner described by Section 139 by not more than five members

Generally control means entitled to greater part of issued share capital, and can be by indivudual or two or more person