Key Man Life Insurance
Key Person Life Insurance is simply life insurance for the key man in a business. This is usually the owner, a founder or maybe a key employee. They are the Key People to a business--without the presence of these individuals can sink a company.
Key Person Life Insurance works by a company purchasing a life insurance policy for that key employee. The Company pays the premiums and is the beneficiary of the policy. If that person where to unexpectedly die, the company would receive the insurance payoff.
The reason for Key Person Insurance is to help the company overcome the blow of losing that Key Man who makes the business work. The company can use the insurance payoff for expenses, to pay off debts, distribute money to investors, pay severance to employees and/or close the business down in an orderly manner. In a tragic situation, Key Person Insurance can give a company other options, than immediate bankruptcy.