- On death or disability of the key person, it replaces the profit that would have been made but for the death or disability of the key person
- It provides fund for meeting the cost of replacing and training a successor to a level that will make him contribute as much as the lost key person was doing before death or disability.
- The company’s credit rating will be enhanced by the contract since financiers will be rest assured that the company will remain profitable in the absence of the key man.
- The existence of the insurance guarantees that the company will continue to be able to meet its financial obligations.
