Key Person (Key Men) Insurance
Employees are Valuable Assets Too
Key person life insurance is a policy the business owns and pays for on the life of an essential owner or employee, with the business as beneficiary. If that person dies while covered, the death benefit is paid to the company, which may use it to steady revenue, reassure lenders, or fund the search for a replacement.
Some people are hard to replace. If losing one owner, partner, or specialist would stall your revenue, spook your lenders, or leave a hole you could not quickly fill, key person life insurance gives the business a financial cushion to steady itself.
What it is / how it works: the business owns and pays for a policy on the life of an essential person, and the business is the beneficiary. If that person dies while covered, the death benefit is paid to the company, not to the individual’s family, and the business decides how to use the funds. Common uses include:
- Covering lost revenue and keeping the lights on while the team regroups.
- Paying down business debt or reassuring lenders and investors.
- Funding the search, recruiting, and training to bring in a replacement.
Coverage can be term or permanent. Permanent policies may build cash value the business can access, which we describe as a policy feature, not an investment.
Who needs it? A founder or owner whose relationships or expertise drive much of the revenue; a top salesperson, technical lead, or partner who would be costly to replace; and a business with loans or investors that depend on a specific person staying involved.
How we help: we help you think through who qualifies as a key person, frame a coverage amount tied to real replacement cost, and request quotes. We coordinate with your CPA and attorney so the structure lines up with your broader plan.
