Key Person Insurance
Key Person Insurance compensates a company upon the death or debilitating injury of a key executive. Basically, Key Person Insurance is life insurance for a company. If the Key person is no longer alive to produce for the company, then the company is compensated for this loss.
Just as with life insurance, Key Person coverage will pay a lump sum to the company in the case of death or incapacitation of the key person.
Key Person Insurance is important for a company that has a lot riding on one or a few main team members. Especially if you are looking for extra funding, Key Person is often required before any funding contract will be signed.
If you happen to lose a very important member of your team, the payout from Key Person Insurance can be used to hire a new top performing team member or provide the capital for an exit strategy.