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The key man insurance policy is a type of coverage available and used by a business. The insurance is one that provides resources in order to help the company ride out an unanticipated and sudden loss of a person that is considered an indispensable to the ongoing operational functionality of the business.

In almost all cases the insurance coverage is only going to be valid in those situations where the loss is due to the sudden passing away or disability of the insured part, the key man.

Minimum Requirements

Most often the insurance company is going to have a set of the minimum requirements that someone must meet before they meet key man status and an insurance policy would be issued on that employee. It’s up to the business to demonstrate this need; with qualities like:

• Expertise
• Creativity
• Crucial knowledge
• Crucial ability

All of those things listed above being essentials to the ongoing viability of the company. It’s an important thing to note though that the insurance coverage is only going to be in effect as long as that individual continues to meet those same criteria and remains an essential element to the ongoing business operation.

Incidents and Coverage

There are some incidents in which the key man is separated from the company that aren’t an automatically covered incident. An example would be someone that is retiring. In this example the valued or key man wouldn’t qualify due to the fact that the business would have had an ample opportunity to be able to prepare for the exit of the employee and should have been able to find a suitable replacement.

It’s very unusual for an insurance provider to cover a sudden dismissal or resignation of a key employee as well; however, there are some exceptions. Things like that are going to vary from policy to policy and you’ll want to make sure that all the coverage that you want is included within the language of the policy before you make your purchase. Additional coverage that’s offered that normally wouldn’t be could be subject to an increase in your premium as well.

Disability, Accident and Undetected Medical

Basically every form of the key man insurance is going to cover the sudden death or loss of a key man employee due to a disability that was incurred either by accident or by a previously undetected medical issue.

This type of coverage might be in the form of a whole or term life insurance and it will most often include a provision or clause that is related directly to the disbursement of a disability insurance payment to the insured company.

As with all forms of life insurance coverage the premium payments are going to differ which is due to factors; such as, the amount of the coverage requested, the types of incidents that are covered in the policies terms and conditions as well as any localized law that’s going to have an impact on the issuance of coverage.