KEYMAN POLICY-OLD MUTUAL

 

KEYMAN POLICY

The Old Mutual Keyman policy is designed to cover against the adverse financial consequences associated with the death of the key employee, who in most cases will be the owner.

HOW IT WORKS

A company purchases a life insurance policy on the key employee, pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the insurance payoff. The reason this coverage is important is because the death of a key person in a small company often causes the immediate death of that company.

The purpose of keyman insurance is to help the company survive the blow of losing the person who makes the business work. The company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors or pay severance to employees.