Key Man Insurance
Key employee life insurance pays a death benefit to the company when a key employee dies. The loss of a key person can be a major blow to a small business if that person is an owner, partner, or the key contact for customers and suppliers, or where the loss of the key person might make the running of the business less efficient and result in a loss of capital. The losses caused by the death of a key employee are insurable. The policy is normally owned by the company, which pays the premiums and is the beneficiary.
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Q: If I insure a valuable member of my company, and he dies, can the family contest the policy?
Explaining to the deceased's family why the business is the beneficiary is difficult. It is better handled at the time the insurance policy is established rather than at the time of death.