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Key man cover is essentially term insurance and will pay out a cash lump sum if the named key person perishes or becomes critically ill within the term of the policy. Key man insurance (also known as key person protection or key person insurance) is an insurance policy that a business can take out to protect itself from financial loss in case of a key individual in their business perishing or being diagnosed with a critical illness.
The company is the beneficiary of a key man insurance policy. The company takes key man insurance out on the life of a key employee of the business.
The company would pay the premiums and, if a claim is made inside the term of the policy, the company will get either a lump sum payment or a regular monthly sum, as set out in the terms of the insurance policy agreement.
A Key Person insurance is either a life insurance or a life insurance and critical illness policy which a business typically takes out in order to protect the life of a key employee within their organization.
The company takes out the Key Person insurance (life insurance or life and critical illness insurance) on the key employee within the organization.
The company pays the premiums and is the beneficiary of the insurance policy in the event of a claim.
Depending on the policy taken out, if the insured employee perishes within the term of the policy (or is diagnosed with a critical illness), the company will then receive the pay out of the sum the employee was insured for.