Key Person Insurance in Massachusetts

What Coverages Does Key Man Insurance Make Available?

The coverages that key man insurance makes available normally extend only to the person(s) who are named on a policy. This eliminates any ambiguity that could arise over whether a person is essential to a business. Businesses can simply determine who they feel is essential and then, purchase policies for those specific people.

For the people named on a key man policy, the policy will usually provide three distinct protections:

• Total and Permanent Disability Insurance, which might cover certain injuries and disabilities
• Trauma Insurance, which might cover other injuries and disabilities
• Standard Life Insurance, which might cover death

When offered, these three policies normally only apply to when a policy is in effect. Should a key person become disabled, injured or pass away after or before a policy’s effective period, any claim is likely to be denied.

Additionally, the life insurance provided is typically most like term life insurance where a set death benefit is provided for a defined period of time. There usually isn’t a savings component and the policy doesn’t last for the duration of the covered’s life, as is often the case with whole or universal life insurance.

Finally, these are all only common guidelines and the terms of a specific insurance policy can always vary. In order to fully understand a particular policy’s protections, a business should review the policy with a knowledgeable agent.