key person insurance

Definition

A life insurance policy taken out by a company on critical employees whose death would cause significant financial loss. Your employer literally betting on how much your demise would cost them.

Example Usage

I found out the company has key person insurance on me, which is flattering until you realize they profit if I die.

Origin

Practice dating back to the early 20th century, formalized in insurance law

Fun Fact

Companies must prove 'insurable interest' to take out key person insurance, and the death benefit goes to the company, not your family.

Source: Risk management and benefits terminology

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