Key person insurance,
Definition of Key person insurance:
Life and/or disability insurance on one (or more) key persons whose loss or unavailability may cause loss of profit, goodwill, or increase in expenses. These insurance policies help finance the search and training of a successor, or compensate for fall in profits. Also called key employee insurance.
Key person insurance is needed if the sudden loss of a key executive would have a large negative effect on the company's operations. The payout provided from the death of the executive essentially buys the company time to find a new person or to implement other strategies to save the business.
Key Person Insurance is a life insurance policy that a company purchases on a key executive's life. The company is the beneficiary of the plan and pays the insurance policy premiums. This type of life insurance is also known as "key man insurance," "key woman insurance" or "business life insurance.".
How to use Key person insurance in a sentence?
- Such insurance is needed if that executive's death or inability to work would be devastating to the future of the company.
- For small businesses, the key person might be the owner or founder, and in some cases, the only person capable of running the business.
- The company pays for the insurance, pays the premiums and is the policy beneficiary, should the person die or become incapacitated.
- Key Person Insurance is a life insurance policy a corporation buys on the life of its top executives. .
Meaning of Key person insurance & Key person insurance Definition