Key Employee Insurance

Definition - What does Key Employee Insurance mean?

Key employee insurance refers to a life insurance policy owned by a corporation or business on a key employee’s life. The business or corporation purchases the policy and receives the proceeds of the policy in the event of the employee’s death. In most cases, the insurance is on employees whose death would affect the successful operation of the business. A key employee is someone whose knowledge and skills contribute significantly to an organization's operations.

Insuranceopedia explains Key Employee Insurance

Key employee insurance has many advantages for an organization. These include:

  • Protects the corporation against a loss of income derived from a key employee's death
  • May provide peace of mind to a corporation that is fearful of the company’s future in the case of the employee’s death
  • Provides protection of investors' financial interests

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