Key Man Insurance is a life insurance policy companies and businesses get on their most valuable employees. The Keyman could be the CEO, the owner of the business, or any other employee critical to the business’s subsistence.
These key man life insurance policies will pay the business the policy amount if the insured key employee dies. This money could be used to hire another person to substitute the person that passed or even hire more than one person.
Businesses usually protect themselves by insuring their most valuable assets like buildings, equipment, etc., but they often forget or ignore to insure the most important assets of all; their key employees. Key Man Insurance is insurance taken by a business firm on the life of an employee (i.e., the Key Man) whose services contribute substantially to the success of the business of the firm.