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. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center