Short DescriptionKeyman insurance is taken by a small and large business firm on the life of most important employee(s) like CEO, COO, Director etc to protect the firm against financial losses, which may occur due to the suddent, accidental or premature demise of the Keyman person.
Long DescriptionKey person life insurance, also known as key man (or woman) life insurance, is a life insurance policy a business buys on behalf of a key executive, partner or worker. The business pays the premiums for this coverage, and is also the beneficiary for this policy. If the insured person dies â€“ if the key man or woman passes away â€“ the business will receive a death benefit.
Think of the definition for key man insurance as a policy that a company would purchase concerning members of a business who are irreplaceable. For example: Some employees are so indispensable â€“ they are the key men and women, without whom a business would suffer a huge financial loss or cease to operate entirely â€“ that the payout from this type of life insurance could resolve corporate debts, absorb the expense of recruiting a new worker, partner or executive, and lessen any other monetary losses.
A company can even use the death benefit to buy out a late partnerâ€™s stake in the business with Key Man Insurance.