How Does Key Person Life Insurance Work? 
This appears to be a simple question ; however , publicly traded corporations have found that by purchasing key person policies on senior executives they can provide lavish payouts when that executive leaves the firm . The idea is simple ; the corporation has an insurable interest in the life of the executive . There are costs of securing a replacement and it the loss of a key employee can affect the companys ability to borrow money . All these factors and many others make these senior executives very valuable . The corporation can insure them to make up the financial impact that their unexpected death would make . By using cash value life insurance they can also accumulate a large amount of cash which will ease the transition when the executive leaves . 