Jargon Buster - Definition of Key Man Life Insurance

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Key Man Life Insurance

is a form of key man insurance specifically tailored to pay out in the event of death. Typically a Key Man Life Insurance would be setup as a 'Life of Another' policy, whereby the company is the owner of the policy and the key employee is the life assured. This means that should the employee die then the company will receive the full benefit instead of the employee's family.

Key Man Life Insurance can be used by businesses to insure their most valuable employees. If the employee then dies, the business can use the insurance payout to:

  • Pay a salary for a new employee
  • Fund the search and sourcing of a replacement
  • Replace lost profits due to the death
  • Buy out shares from the deceased

 

An employee for this type of policy must be somebody who is very important to the business and if wasn't with the business would cause a financial loss.


Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

If you are in doubt of the meaning of any terms, why not email us on info@topquoteuk.com

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