Key man life insurance, also known as key person insurance, exists to protect companies from the loss of people who are vital to the function of their business. The idea is that a contribution of some employees is so large that the risk their potential loss is worth paying to ensure against. We are not talking about typical employees here, we’re talking about employees with super-specialized knowledge or those who bring a completely original or unique contribution to an enterprise. They could be executives or they could be people with technical knowledge that very few other people have.
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Key man insurance policy proceeds can be used to pay for temporary, possibly very expensive help that the company will need to ensure continuity while it is searching for a replacement. The payout will probably also going toward the cost of finding and training of new personnel to replace the valued employee.

If employee is involved in a project and his sudden absence would constitute a significant negative impact to the endevour, it may very well be worth the expense of key man insurance to protect against delays or even cancellation of the entire project. The reality is that the loss of even one key person with special knowledge can be disastrous even for efforts involving hundreds of people, and this would hold true across many different industries.

Another common use of a key man life insurance policy is its purchase by partners in a business so that in the event of the sudden demise of one of the partners, the other will have funds available to purchase the interests of the deceased former stakeholder.

The presence of certain employees may be imperative to achieve future sales or to the planned expansion of a company, and the possible loss of that employee may absolutely be something against which it is worth insuring. But a point of clarification: it is important to recognize that the company is not protected against the losses it will incur in having a critical project delayed or canceled, just as it is not covered against the dollar amount of the sales it could lose. The company has to decide on an amount of money that avoiding problems like this will be worth to it, and purchase a policy that will cover the company for that amount of money.

It may be very difficult to determine the value of certain key to the employees to the company, but in many cases their continued presence is so vital that key man insurance is something at which companies have to take a very serious look. There are companies that specialize in finding a key man insurance quote to suite the needs of companies of all sizes.
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