Key Employee

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Related to key person: Key Person Insurance

Key Employee

A very important employee. A key employee may have contacts highly beneficial to the company, may work hard and generate more revenue than any other employee, or may have some other skill that would be difficult or impossible to replicate in another employee. Often, but not always, a key employee is a manager. A company may purchase key person insurance to protect itself against the possibility that an employee may unexpectedly die or become unable to work, which would deprive the company of his/her skills.
References in periodicals archive ?
Key person cover is an insurance offer that provides the business with a sum of money if a key person dies or is seriously ill.
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.
The loss of a key person can cause a business to be hit by a loss of profit, reduced sales, recruitment/training costs and disruption to their plans, to name but a few potential problems.
A company owned a key person policy with several million in face value.
However, only one in four business owners--24 percent--has an individual disability insurance (IDI) policy, fewer than one in 10 (9 percent) of business owners have key person disability insurance, and fewer than one in 20 (4 percent) have a disability overhead expense plan in place.
A key person can be anyone directly associated with the business whose loss can cause financial strain to the company.
Key person insurance protects a business when a key person dies.
Key person insurance can be put in place to provide the funds for advertising and recruitment of a replacement in a business.
The private equity professionals think of key person life insurance to help protect their investment, but that's where most of them stop.
If a company loses that key person, the skill and share of business is gone, and the costs have to be absorbed.
In the event of losing a key person, either through critical illness or death, the company's future profit and survival is at risk.