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Key Person Insurance

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Key Person Insurance
A type of life insurance policy that a company purchases on the life of the company's key executive.

Notes:
The company is the beneficiary of the plan and therefore pays the insurance policy premiums. Key-person insurance is needed if the sudden loss of a key executive would have a large negative effect on the company's operations. The payout provided from the death of the executive essentially buys the company time to find a new person or to implement other strategies to save the business.

Also known as Key Man Insurance, Key Woman Insurance, or Business Life Insurance.
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It's also important to buy adequate comprehensive, liability, property, worker's compensation and key person insurance, as well as additional coverage for incidentals, in case your office equipment is damaged by theft, fire or a power outage, says Gregory Goss, chairman and CEO of The Goss Group Inc.
5 things you should know before starting a business by Ayres-Williams, Roz / Black Enterprise
One focuses on business succession and covers key person insurance and buy/sell planning; one covers executive benefits such as restricted executive bonus arrangements and deferred compensation plans; and the third addresses premium financing, including financed split dollar rescue.
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