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Companies Pay for Thrill-Seekers

January 19, 1999

Many companies take out ``key man″ insurance _ a specially tailored life insurance policy _ on their chief executive officers to protect the company if a leader is injured or killed. But if the leader engages in risky sports, premiums cost much more.

Typically, a company might pay $10,135 in annual premiums for a $1 million life insurance policy on a healthy 50-year-old CEO. If that boss sky dives, premiums jump to $14,735. If he races cars on a professional level, premiums cost $27,235.

If a sport is too risky, insurers may even decline coverage. For example, insurers won’t cover scuba diving below depths of 150 feet. Or insurers may decline to pay anything if the death occurs during a specific activity.

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