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Business
Key Man Insurance
Life insurance taken out by a company on a critical employee (often the founder or top expert) to protect against financial loss if that person dies or becomes disabled.
Key man insurance is common in businesses that rely heavily on one or a few people. The company pays the premiums and is the beneficiary. It protects cash flow, debt covenants, and investor confidence. Proceeds are usually tax-free in many jurisdictions but must be properly structured.
It's insurance on the star player of the team so the club doesn't go bankrupt if they get injured.
Real world: A small tech startup with one brilliant coder takes out key man insurance. If the coder dies suddenly, the payout helps cover hiring costs, lost revenue, and keeping the business running during transition.
💡 Key man insurance protects the business when its most important person is no longer there.