Key Person Insurance

A key person is an employee or a business partner/owner whose skills and intellectual capital are so valuable that your business would suffer substantial financial losses due to that person's death or inability to work due to a disability. This person has knowledge, skills or talent that few others can duplicate. The industry he or she works in, or the nature of the work, may be so specialized (such as research or design) that there are few others with the skills needed. In addition, the unique skills held by a key person may not have been acquired through education or experience but through their own creativity, talents and interests.

Key person insurance can provide your business with the working capital it needs to keep operating and to fund the recruitment and training of a replacement should a key person pass away or become totally disabled. If the key person is the most significant contributor to your business, your company may not be able to continue operating without that person. In that case, key person insurance could compensate you (or your other business owners) for lost income should your business have to close.

This depends on the type of life insurance plan you choose for the policy. For example, term life insurance can provide coverage for 10 or 20 years at a time. However, a permanent plan like universal life insurance could provide protection for the entire lifetime of the insured person.