Would someone please give me a proper definition/explanation of what is meant by "key person life insurance"? If you do reply tome with the information I have asked for, also give me the SOURCE of your response.

Blessings Barbara Ransom

-- Anonymous, July 27, 2001

Answers

Key Person Insurance at my former place of employment (Texas Instruments (TI) Inc.) was insurance with TI as the beneficiary to prevent catastropic loss if the key person were to die or become incapicated before he/she was able to complete a project that would significantly affect the profit margin of the company. The premimum for such insurance was paid by the company. (Source - Texas Instruments, Inc)

I have no idea what Key Person Insurance means to the AME Church.

Blessings,

Pastor Paris

-- Anonymous, July 27, 2001

Barbara,

Key Person Life Insurance is a sales concept, not an insurance product. The concept can be funded by various kinds of insurance. It is coverage that is put on the life of an individual that is "key" to the success of a corporation or Organization (e.g. church). The beneficiary is usually the corporation or organization and the premiums are usually paid by the corporation or organization. With any reputable Insurance Company you would need to show that there is an insurable interest between the corporation or organization and the "key" person. (i.e. that there will be a financial loss to the corporation or organization upon the death of this "key" person). Should the "key" person die while the policy is still inforce, the death proceeds from the life insurance policy go to the corporation or organization. These proceeds are used to keep the corporation or organization going, e.g. for costs associated with hiring a replacement "key" person.

The Source of my response is 20+ years personal experience in the Life Insurance/Financial Services Industry. However, you could look at most basic life insurance text books and find an explanation.

Hope this help!

-- Anonymous, July 27, 2001