Asked by Erin  |  Submitted November 20, 2015

What is key person life insurance and who do I buy it for?

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  Answers  |  2

November 24, 2015

Hello Erin,

Key person Life Insurance is mainly use for a business. You buy this product to protect your business if your key person or primary employee (or owner) leave or some catastrophic life event happen to them. Most of business who just starting up are commonly buy this products. Again, Key person can be the owner(s) or employee of the business. Policy owner use the benefits they receive from the insurance company to replace the person how had lost. Sometime training or searching for this person can take a long time. Benefits are use in this way too.

You can buy this products in most known insurance company. But the most important thing is you consult your Trusted Financial Adviser to properly structure this kind of policy.

$commenter.renderDisplayableName() | 09.20.20 @ 23:18


April 15, 2016

Key person plans are usually a business use of life insurance. It's for what it's called. You cover your key employees with a policy to help with replacement costs if they were to suddenly pass away. It's a way to reduce loses while you find/train somebody else to fill that position. These policies also can be designed to keep key employees around as you can increase the coverage to cover the business loss/recovery period and also offer the key person income for x number of years for their family if they died. Golden handcuffs is the term for that aspect. So a key man policy can protect the business but also provide motivation for that key employee to stick around and not go elsewhere.

$commenter.renderDisplayableName() | 09.20.20 @ 23:18