What is key man life insurance? A key man is an employee of a company, usually the CEO or president, who would be greatly missed. Key man life insurance is a policy in which the beneficiary of the insurance policy is the company, not one individual.

With life insurance, a sum of money is given to one person at the time of the policyholder’s death. This money can be used to pay off debt, be invested so that a family has a regular supply of income, and other similar ideas. Business Key man term life insurance works in the same manner. Money is paid at the time of the important employee’s death (Keyman). This money can be used to pay off creditors, buy out the deceased’s share in the business, or offer financial support to the deceased’s spouse or children.

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To qualify for keyman life insurance, an insurance agent or company comes in and offers rates to the business taking a number of items into consideration. The employee who wants the insurance will be asked for medical information including family history, a medical exam is usually necessary, and drug testing is normally requested.

During an insurance requested physical exam, you will be required to give a blood sample and urine sample. A registered nurse, doctor, or physician’s assistant will take a blood pressure reading, pulse, height, and weight. The blood sample is used to check cholesterol levels, thyroid function, liver function, and often HIV and other life threatening illnesses. The urine sample is used to screen for drug use and alcohol abuse and diabetes.

When having a life insurence physical, give yourself a couple days without alcohol. This can help with the readings. Make sure you are drinking plenty of water; this can be very helpful with the urine test because you will actually be able to provide a sample. Many companies also recommend you do not eat anything for at least twelve hours before your blood is drawn so that they can get fasting (meaning unaltered from a sugary or greasy meal) readings.

The insurance company will base the policy premiums on the results of these tests. The better the employee’s health is the lower the premiums will be. Also if the key person to be insured is not a smoker, the chances of getting the best insurance rates will be best. To qualify for the lowest rates, try to purchase the policy when the key man is young, in excellent health, and avoiding dangerous activities (scuba diving, sky diving, piloting, rock climbing) will help.

Key man life insurance can help keep a company from sinking into bankruptcy during an unexpected death. It is important insurance to own.

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