What Does Key Man Insurance Cover?

To determine if you should buy key man insurance, you need to know what items this type of insurance will cover. Key man insurance is a specialized form of life insurance policy. It is designed to cover losses resulting from death or disability of a key man in your business. It is intended to carry your business through a possible down time resulting from such an event. It is not designed to cover the family of the deceased or the person who becomes disabled. It is specific to the business expense lost as a result of such an incident. There are several items which can be covered in this type of insurance plan. The main part of the coverage will generally insure the business for the cost to train a new employee. This training coverage is designed to cover all expenses for taking over the same position as the first key man. Other coverages include the cost associated with loss for the company. Generally it refers to the actual loss of profit resulting from a lack of a key man doing the job as well as it previously performed. Although these items are spelled out in the policy, the business can use the funds as they see fit once a claim is made to the key man policy.