Key Man Insurance

Definition

A life insurance policy on a company's critical employee that pays out when they inevitably die, keel over, or are discovered to be embezzling.

Example Usage

We took out key man insurance on our CEO, which will give us $2M to search for a replacement.

Origin

Business insurance terminology from mid-20th century

Fun Fact

Key man insurance has been controversial because it creates the moral hazard that companies are incentivized to harm their key people

Source: Business insurance and risk management terminology

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