Key Person Insurance
Key person insurance typically pays a lump sum (one payment) on the death or total and permanent disability of a key employee covered by the policy. This money can be used to help cover:
- Financial losses including any resulting increase in expenses or reduction in revenues or profits;
- Liquidity to replace the income contribution of an individual the business relies on for cash flow;
- Debts such as business debts to third parties or shareholders, where the ability to repay the debts may be made more difficult by the departure of the key person.