keyman insurance policy

Key man insurance policy

There is no legal definition. In general, it has the following features. An employer takes out an insurance policy insuring against loss of profits arising from the death, sickness or injury of a key employee.
The beneficiary is the employer.
In the case of a life insurance policy, it is a term insurance, covering the life of the employee within the term of the policy, with no other benefits.
The term does not extend beyond the period of the employee's usefulness to the employer.
The purpose of taking out the insurance is to compensate the employer for the loss of trading income that may result from the loss of the service of the key employee in case of death, sickness or injury.

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Key Man Insurance

The Key Man Insurance, what is it?

Also called Key Man protection, Key Woman Insurance, or Business Life Insurance. Key man insurance is a life coverage bought by the organization on the life of a representative or employees whose loss would have adverse impacts on the organization. Workers are important resources and the loss of some key workers could significantly affect the benefit, stability and advancement of the organization.