View INSTANT Quotes

Key Man Insurance

Key Man Insurance is a life insurance policy a business takes out on a crucial employee, compensating the company for potential losses if the employee passes away.

What is Key Man Insurance?

Key Man Insurance, also known as Key Person Insurance, is a life insurance policy that a company purchases on a vital employee whose loss would significantly impact the business. The company is both the policy owner and the beneficiary, and it pays the premiums. If the insured key person—such as an executive, founder, or top salesperson—dies unexpectedly, the business receives the policy’s death benefit, which can help cover financial losses, recruit and train a replacement, or manage potential disruptions.

This type of insurance is particularly important for small to medium-sized businesses that heavily rely on a few individuals for their success. For instance, if a company founder holds crucial relationships with clients or possesses unique expertise, losing them could endanger the business’s financial stability. Key Man Insurance provides a safety net, giving the company time and resources to recover from the loss.

Key Man Insurance is not a personal benefit for the insured individual but rather a strategic financial tool for the business. It helps safeguard the company’s future, maintain stability, and reassure investors, creditors, and employees about the business’s ability to handle unexpected situations.