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Exclusive Insurance and Benefit Plans for Business and Education |
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Financial Planning
Estate Planning and Wealth Accumulation | Online Insurance Key Employee Protection Their is nothing tricky or mysterious about key employee insurance. Its sole purpose is to indemnify a business for the financial losses that occur when a key employee dies. Nearly every business has key employees who are critical to the overall success and profitability of the business. Key employee insurance is insurance on the life of a key employee, purchased to reimburse an employer for the economic loss caused by the death of the employee. As such, key employee insurance is not a type of life insurance policy; rather, it is an effective way for a business entity to use life insurance. As a general guideline, you can assume that a key employee is anyone who has a substantial impact on the financial success of a business. Smaller companies tend to have a great need for key employee insurance since they usually do not have a pool of employees from which to select a replacement if a key employee dies. The success of the smaller employer can be directly attributed to the vital contributions of a few individuals. A key employee can be anyone who is responsible for management decisions, who is highly paid, who has a significant impact on sales, or who has a special rapport with customers and creditors. |
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