Key Person Insurance
InsuranceGlossary term
Definition
Life or disability insurance purchased by a business on a critical employee whose loss would cause significant financial harm to the company. The business pays the premiums and is the beneficiary, using proceeds to cover losses and fund a replacement search.
Related terms
- Life InsuranceInsurance that pays a death benefit to beneficiaries when the insured person dies. Types include term life (temporary coverage) and permanent life (lifetime coverage with cash value).
- Term Life InsuranceLife insurance that provides coverage for a specific period (term), typically 10, 20, or 30 years. More affordable than whole life insurance but has no cash value.
- BeneficiaryA person or entity designated to receive assets from a trust, insurance policy, retirement account, or will after the owner's death.
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