Key Person

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Agent Files
How it Works.pdf
Key-Person-Disability-Insurance.pdf

Client Files
Key Person Basics.pdf

What is Key Person Disability?

The objective of key person Replacement (KPR) insurance is to provide a benefit to the owner (employer) if the key person (insured) becomes totally disabled. The policy is designed for minority or non-owner employees who earn $30,000 or more a year and who are critical to the success of the business. Key person coverage provides a lump-sum benefit with the ability to add on a monthly benefit for a period before the lump sum is paid.

Target Markets

Small- to medium-size businesses, with:

• Employees who have specialties or experience not easily replaceable

• Key person life insurance in-place or being considered

Typically sold to the following types of occupations - business owners, key corporate executives, medical professionals, attorneys, engineers and other professionals.

How much Key Person benefit can be purchased?

Most insurance companies will issue up to 2 – 3 times the key person’s earnings.

What is an elimination period?

The elimination period is the period that must pass before benefits are payable. Typical elimination periods include 90, 180 when a monthly benefit is payable. For a lump sum payment, the elimination period options are 180 days, 365 days, and 730 days. The shorter the elimination period, the more costly the plan.

What is a benefit period?

The benefit period is how long benefits are payable while you are on claim. Typical benefit periods are lump sum and monthly installments.

What is the definition of total disability?

Most policies will consider you to be disabled if you cannot perform the substantial and material duties of your occupation, and you are not working.

What is a residual disability?

Residual disability benefits are only available through a specialty carrier.