Key Person Insurance — Protecting the People Who Drive Your Business

What it is, why it matters, and whether your business needs it

Every business has people who are essential to its success — visionaries, rainmakers, technical experts, or the one person whose relationships, knowledge,and leadership keep everything running. What happens to your business if that person is suddenly gone?

Key Person Insurance, is a life and/or disability insurance policy that a business takes out on a critical employee or owner. The business is both the policy owner and the beneficiary. If the key person passes away or becomes disabled, the business receives the insurance proceeds, giving it the financial runway to survive, stabilize, and transition.

"The loss of a key person is one of the most underestimated risks a business can face — and one of the most affordable to protect against."

Why Businesses Need It

• Loan & credit protection — Lenders and investors often require key man coverage before extending credit or capital to a business.
• Business continuity — Proceeds can fund the search, hiring, and onboarding of a qualified replacement, keeping operations running.
• Buy-sell agreements — In partnerships, key man coverage is often used to fund a buyout if one partner can no longer continue.
• Client & contract confidence — Coverage reassures clients and partners that the business will fulfill its obligations even through unexpected transitions.
• Revenue protection —If a top salesperson or key executive drives a significant portion of revenue, their loss could be financially devastating without a safety net.

Key Person coverage is highly customizable. Policies can be structured as term life, permanent life, disability, or a combination, depending on the nature of the risk and the size of the business. Premiums are generally based on the insured person’s age, health, and the coverage amount needed.