Keyman Insurance is a life insurance policy taken by a business on the life of a crucial employee, owner, or director whose skills, leadership, or expertise are essential to the company’s operations and profitability. In the unfortunate event of this individual’s death or permanent disability, the insurance payout helps the business absorb the financial impact, manage operational disruptions, and cover the costs of recruiting and training a replacement.

This policy ensures that the business doesn’t suffer severe financial loss due to the sudden absence of a key person, especially in scenarios where their presence influences investor confidence, client relationships, or ongoing contracts. Keyman Insurance is not meant for the personal benefit of the insured but to financially protect the company against potential losses that arise from losing its most valuable human asset.

It is a strategic tool in business risk management, especially for startups, closely-held companies, and firms heavily reliant on specific individuals for success and continuity.