Key Person Insurance

AAA

DEFINITION of 'Key Person Insurance'

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.

Also known as "key man insurance," "key woman insurance" or "business life insurance."

INVESTOPEDIA EXPLAINS 'Key Person 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.

RELATED TERMS
  1. Corporate Ownership Of Life Insurance ...

    Insurance policies taken out by companies on their employees, ...
  2. Commercial Blanket Bond

    A type of liability coverage for employers who want to protect ...
  3. Broad Form Storekeepers' Insurance

    Insurance coverage provided to storeowners in the event of theft ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Life Expectancy

    1. The age until which a person is expected to live. 2. The remaining ...
  6. Life Insurance

    A protection against the loss of income that would result if ...
Related Articles
  1. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  2. Will Insurance Keep Your Business Safe?
    Entrepreneurship

    Will Insurance Keep Your Business Safe?

  3. 6 Retirement Savings Tips For 45- To ...
    Savings

    6 Retirement Savings Tips For 45- To ...

  4. 9 Penalty-Free IRA Withdrawals
    Taxes

    9 Penalty-Free IRA Withdrawals

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center