Business

Here is an example a code word would be a good idea in a business. A robber is in the manager's office and his plan is to get money from the manager and leave undetected. If he is seen, he might panic and start shooting.

If a worker walks by and sees the danger, the worker needs to alert everyone to evacuate or stay clear of the area. If the worker gets on the speaker and announces the danger, it would alert the person that he or she has been discovered. However if the business had a code word like Mr. Jackson. The worker could pass the word over the intercom, "Would Mr. Jackson please come by the coffee shop" (in this example the coffee shop is next to the manager's office so everyone would know to stay clear of that area and to evacuate.)

Personal

Here is an example where a code word would come in handy.

Your daughter is talking on the phone when a guy approaches with a gun. he tells her to hang up without alerting the person on the phone that she is in danger. If she tells you she is in danger, he might shoot since he told her not to say anything.

However if you have created a code word with your daughter (like Grandpa Will for an example), she could say "I have to go Grandpa Will). You would know she is in danger and you need to call the police.

Caution: Use a code word that you will not use. As in the example above, don't use Grandpa Will as a code word if she actually has a grandfather named Will. There might be a situation where she would use it when it is not an emergency.