Key Person Life Insurance
There are many kinds of life insurance on the market, but one you may never have heard of is known as key person life insurance. This specialized form of life insurance is typically taken out by companies and their board of directors in order to protect the business in the event one or more of their key workers dies unexpectedly.
While you may never have heard of this type of life insurance, key person life insurance plays a very important role in the world of business. That means that key person life insurance plays an important role in American life, and it is a good idea to understand how it works. If you own stock in any publicly traded company you have a stake in the health of that company, and that means you have a stake in the health and well being of the people running that company.
The board of directors understands the importance of their key people even more than the stockholders, and that is why they choose to carry key person coverage on their most important workers. The exact number of positions that fall under the key person provisions of the company charter will vary from organization to organization, but the intention is always the same. Key man life insurance coverage is designed to provide the owners of the company with the protection they need in the event one or more of their top executives where to die unexpectedly.
In some cases this type of key person life insurance coverage will be extended only to the chairman, chief executive officer or other vital executive. In other cases companies may take out this type of life insurance coverage on other executives as well, including sometimes the chief financial officer, chief operating officer and perhaps a few key vice presidents.
No matter which employees are covered by it, key person life insurance coverage provides valuable protection for companies and their investors. If you have invested your valuable money in the stock market, you do indeed have a stake in key person life insurance, and it is a good idea to understand how this type of coverage – or lack of it – could impact the fortunes of the companies in which you invest.