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Types of Key Man Insurance

Key man insurance offers financial protection to a company that loses a key employee due to reasons of death or disability. The idea behind this protection is to pay a benefit to the company that makes up for the negative economic impact of losing this vital person. Key insurance comes in several different forms and has various options that employers can choose to include in their policy. A permanent life quote or a term insurance quote online are what companies obtain when they are evaluating key man policy options.

Purpose of Key Man Insurance

The exclusive purpose of key man insurance is to help a company financially as they transition to a new hire or some other arrangement upon the lost services of a key employee. The proceeds the company receives may be used at that time for any purpose it deems most appropriate to help in the adjustment period. Otherwise the company receives no financial gain while the employee is still on the job.

Types of Key Man Insurance

Two main types of key man insurance are often used by businesses. They are permanent life insurance and term life insurance. Term life is purchased for a certain number of years. You can obtain a term insurance quote online through many nationwide providers. Permanent life insurance is the more commonly used and guarantees that the policy will be effective as long as the individual is employed with the company. Both types of insurance products can be found by searching for affordable life insurance quotes in connection with key man insurance.

Key Man Life Insurance

Affordable life insurance quotes for key man life insurance policies are provided by many types of insurance companies. This type of insurance only pays benefits to the company upon the death of the specified individual but excludes any payment for other reasons including disability.

Determining the Key Man

Usually a particular person who contributes great value to the company who cannot be easily replaced is someone who would be considered as a key man or key person. The employee who contributes to a large proportion to the company’s success such as a highly talented sales person is one example. Often several key people within a firm such as a group of important executives will be connected to a key man insurance policy. Getting either a term insurance quote online or a permanent life quote will give you an idea of how these key man policies are structured.

Length of Key Man Policies

Businesses typically pay for the policy as long as the employee keeps working at the firm. If the key man leaves or retires the company can simply stop paying the premiums or transfer the policy to the employee himself who can use it as a disability or life insurance policy.

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