Key Person Insurance
Protecting your business from the financial impact of losing a mission‑critical individual
Key Person Insurance is a life or disability insurance policy a business takes out on an essential employee whose knowledge, leadership, or revenue‑generating ability is critical to the company’s success. If that individual unexpectedly dies or becomes disabled, the policy pays a benefit directly to the business, helping stabilize operations during a period of disruption.
Why Businesses Use It
Operational continuity — Covers the financial shock of losing someone whose absence would materially affect day‑to‑day operations.
Revenue protection — Helps offset lost sales, delayed projects, or paused client relationships tied to the key individual.
Leadership stability — Provides resources to recruit, train, or transition new leadership without jeopardizing the company’s financial health.
Investor and lender confidence — Many lenders and investors require key person coverage as part of financing or partnership agreements.
Who Qualifies as a “Key Person”
A key person is anyone whose loss would create a significant operational or financial setback, such as:
Founders and executives
Lead engineers or product architects
Top sales producers or rainmakers
Specialists with unique technical expertise
Public‑facing individuals who drive brand value
What the Policy Covers
Key Person Insurance can be structured as:
Key Person Life Insurance — Pays a lump sum if the insured dies.
Key Person Disability Insurance — Pays benefits if the insured becomes unable to work due to illness or injury.
Funds are typically used for:
Covering lost revenue
Bridging payroll or operating expenses
Hiring and training replacements
Paying off business loans
Reassuring stakeholders during transition
Who Owns the Policy
The business is the owner, premium payer, and beneficiary. The insured individual provides consent but does not receive the payout.
Ideal For
Companies of any size that rely heavily on one or a few individuals—startups, professional firms, specialized technical shops, and businesses with concentrated revenue sources.
