Key Man Policy

Key Man (or Key Person) insurance is an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business.

  • A life insurance policy for business succession or protection purposes.
  • The policy’s term does not extend beyond the period of the key person’s usefulness to the business.
  • Policies are usually owned by the business and the aim is to compensate the business for losses incurred with the loss of a key income generator and facilitate business continuity.
  • Does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.
  • Creates non-attachable assets
  • Increases the value of the business for potential buyers
  • Creates immediate cash for orderly buyout of deceased partner’s interests

Buy / Sell Agreement

A Buy / Sell Agreement is used by Sole Proprietorships, partnerships and closed corporations to divide the business share or interest of proprietor, partner, or shareholder. The owner of the business interest being considered has to be disabled, deceased, retired or expressed interest in selling. The business share is sold according to a predetermined formula to the company or the remaining business members, so long as the deceased’s estate agrees to sell.