Disability of a key executive can destroy a business. Disability of any worker can strain a family. Before age 65, one is much more likely to suffer a long-term disability (LTD) for six months or longer than one is to die. Fortunately, this risk can be insured.
A company or the worker and one’s dependents can be the policy beneficiaries. Where the company is the beneficiary of the LTD (or life) insurance policy, it is referred to as “key employee” (a.k.a., key man) insurance. It refers to the function of the policy rather than a specific type of insurance. The benefit finances the company’s recruitment, hiring and training of a replacement executive. If the worker and dependents are the beneficiaries, they can use the benefits to pay normal expenses and costs of care.