Life Insurance: What Is Key-Person Insurance?

Key-person life insurance is a type of insurance coverage that companies can purchase in order to protect themselves. With this type of life insurance coverage, a company is going to purchase the policy in order to cover the life of a key-person within the organization. This is done so that the company can be paid a certain amount of money if that individual passes away.

Why it is Used

Many times, the success of a business will depend greatly on the performance of key people within the organization. If one of those individuals passes away unexpectedly, the business could experience a significant financial loss. The business may not be able to operate as profitably as they did whenever that individual was in charge.

Key-person life insurance is something that most business advisers and consultants use because it protects the interests of the company.

Disability

Many companies will also include disability insurance with their purchase of key-person life insurance. This way, if the key-person is injured, the business will be paid a certain amount of money to help them cover expenses while that individual is unable to perform their normal duties.

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