Key person insurance, sometimes called Keyman insurance, is an important tool of business insurance. In general, it is an insurance policy that can be taken out by a business, not a person, to compensate that business for financial losses that nay arise due to the untimely death or extended incapacity of an important member of the business.
Simply put, key person insurance is a standard life insurance or trauma insurance policy that is used for business protection purposes.
Key person policies are usually owned by the business and the aim is to compensate the business for losses incurred due to the loss of one of the key income generators.
It helps the continuity and longevity of the business. Key person insurance compensates the business with a fixed monetary sum as specified within the insurance policy.