Keyman - Key Person Insurance

Key Man Insurance is life insurance that businesses take out on their key people in the event of an untimely death. In small businesses, the key people could include the owner or founder and perhaps crucial employees to that business. A key person is someone who, without their expertise and knowledge, the company would crumble. These people are who you need a key man insurance policy on.

If a company purchases a life insurance policy on a key employee, pays the premiums and puts the company as the beneficiary, the company receives the insurance pay off if that person passes away unexpectedly. The purpose of this is to help the company survive until it can find a replacement person to fill those shoes.

If the death of the key person means the company closes down, this will aide in paying severance for the employees as well as paying off debts. This aids in being able to close the business down without headaches.