Key Man Insurance

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Key Man Insurance

A life insurance policy that a company purchases on one or more of its most important employees. The company pays the premiums and is the beneficiary. If the employee dies unexpectedly the company receives the benefit to offset the financial loss from the employee's demise. Partnerships often have key man insurance on each of the partners, while publicly-traded companies carry policies for major executives and managers. Companies use key man benefits to buy back stock in the company from the decedent's estate. It is also common to use the benefit to offset lost production or to pay a headhunter to find a replacement employee.
References in periodicals archive ?
The key person insurance is the alternative to forcing the company to pay out a large sum of capital that is depended upon or critical to the business's function.
Many business owners not only fail to identify and evaluate the potential risks their companies face, but are also unaware of the importance of a policy such as key person insurance or do not even know such a policy exists.
Key Person insurance is woefully underutilised in the UK.
Key person insurance and an up-to-date and funded partnership agreement are just a couple of techniques to ensure business continuity after the loss or disability of an owner or key person.
The Man with the Bag: CEO of the North Pole As the head of the workshop, Santa himself should have key person insurance.
The buy-sell strategy is a great technique to start with and may lead to other sales, such as key person insurance, executive compensation and personal planning for the business owners.
Suitable protection provision in the form of a key person insurance policy can help businesses weather such difficult periods.
Key person insurance protects a business when a key person dies.
At the same time, the key person insurance policy was rewritten to enable both the nonprofit and the executive's family to be protected should he pass away.
The safety net provided by key person insurance (or, as it was called in the old days, "key man" insurance) can enhance the value of a business, in addition to providing peace of mind.
Key person insurance is a simple yet effective insurance policy taken out by the company on the life of that person.
Key Person Insurance can provide the funds needed to recruit a replacement, or replace the loss of profits and therefore keep trading.