Key Person Disability

Key Person Disability income insurance serves the same purpose as a Key Person Protection plans – it indemnifies the business for the lost services of the key individual. The business is the owner of the policy and pays its premiums. In the event an essential person becomes disabled, the policy pays a monthly benefit to the business in order to cover expenses for additional help or outside services.

The key person's financial value to the business is determined according to the potential loss of business income that could occur because of the individual's incapacity, and the cost of hiring and training a replacement. This value becomes the disability benefit amount paid to the business. The benefit can be paid in a lump sum or in monthly installments. The benefit period may be from one to two years, with an elimination period of 30 to 90 days generally being applied.