Key Person Insurance
Key person insurance, also commonly referred as key man insurance or key employee insurance, is an important form of business insurance. In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise in an event of death or disability of an important member of the business.
Many businesses have a key person Who is responsible for the majority of profits or has a unique and hard to replace skill set. The loss of this person from the business could cause a significant financial loss. To help ensure the business Will continue in a successful manner, an employer may take out a key person insurance policy on the life or disability of that employee Who exhibits that value to the company. The employer does this to offset the costs of replacing and training a new employee and losses in production or profits that a business Will likely suffer in the event of the loss of a key person