Key Person Insurance
Key person insurance is needed in case of the sudden loss of a key executive that would have a significant or adverse effect on the company’s overall operations.
A life insurance policy of this nature means that the company is the beneficiary of the plan and pays the insurance policy premiums.
Sometimes this type of life insurance is also known as “key man insurance,” “key woman insurance,” or “business life insurance.”
The payout provided through the policy upon the death of the person essentially buys the company the time needed to find a new person or to create a strategy to keep the business on track.
If you have a small business, the key person will usually be the owner, the founders, or a key employee that heavily drives success.