Key Man Insurance
What is Key Man Insurance?
Key man insurance is a policy that is protects the company if an individual which is vital to an organization were to become disabled or suffer an untimely death.
Proceeds of the policy are paid to the company and utilized to find a replacement, repay investors, or buy-sell agreements.
Who is a candidate for Key Man Insurance?
A company that would be unable to continue operations if an executive or employee were to become disabled or suffer an untimely death.
Investors will typically require key man insurance to protect their investment in a company.
The CEO of a private company passes away who is also has an investment in the organization. Proceeds of a key man insurance policy are used to purchase the CEO’s shares from the estate.
A venture capital firm invests in a company with an innovative new platform. The head developer passes away and the company must close its doors. The company distributes the proceeds of the key man insurance policy to venture capital firm.