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Key Person Replacement Insurance is necessary to business owners who want to maintain the strength of their company if a key employee were to become totally disabled.

If an employer takes out a Key Person Replacement policy and the insured key employee meets the definition of Total Disability, the owner of the policy (the employer) receives either a lump sum payment or a combination of monthly and lump sum payments to cover the costs for the loss of the employee and to train a replacement.

To meet the definition of Total Disability, the insured must not be able to perform the duties of their Key Person occupation and are unable to work in any other occupation which is comparable by duties and/or earnings for the business.

Some benefits of Key Person Replacement Insurance offered by our carriers include:
  • Guaranteed Premium – The premium cannot increase due to changes in the insured key employee’s health.
  • Flexible Payment Methods – The policy can be set up to provide benefits in a lump sum payment or a combination of monthly and lump sum.
  • Waiver of Premium – After the insured key person is disabled and meets the elimination period, premiums are waived.
  • Interrupted Elimination Period – It is possible to combine different periods of disability to help reach the policy’s elimination period. These periods of disability must occur within a period that is twice as long as the elimination period, but less than one year.

To learn more about Key Person Replacement Insurance contact your Disability Income Specialist today.

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