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Key Man Insurance Back to Top

Life insurance purchased on a key person (sorry about the gender bias, but that's what its historically been referred to as, although Key Person Insurance is certainly a better phrase). For example, a closely held business has a key manager. If that manager died it would take many months to find a suitable replacement, and significant additional marketing costs would have to be incurred to repair the businesses image without the key manager. To address these costs the business purchases a $1 million key man policy on the manager. If he dies, the business will use these funds to rebuild. Contrast this with buy out insurance which is used to purchase an owners' equity in the business in the event of death.

Kiddie Tax Back to Top

Unearned income (dividends, rents, interest, and so forth) of a child over 18 but younger than 24, who is a student, will be taxed to the child at the parent's highest tax rate. This tax makes family tax planning much harder. See also "unearned income".