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

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

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

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center