What is key person insurance?
Key person insurance is life insurance on a vital person in your business. This could be the owners, the founders or even a key employee.
It is important to recognize the difference between key person insurance and a personal life insurance policy. While a personal life insurance policy pays out to your beneficiaries, such as your spouse or family, a key person insurance policy pays out to the company.
In the event of the death of a key person with coverage the payoff can be use to:
- Cover expenses until replacement personal can be hired
- Pay off debts, distribute money to investors
- Pay severance to employees in the event of a sudden closure
- Buy back ownership in the company
- Avoid bankruptcy
- & More