Protecting You and Your Business

Key Person Life Insurance

In Case the Unthinkable Happens

In business, every employee is important – but some employees are essential. Whether it’s their reputation, name, skillset, or clients they bring into the company, the loss of certain key employees can have a devastating impact on an organization.

Key Person Life Insurance is a type of life insurance policy that provides a death benefit to a business if its owner or another significant employee passes away.

Business Owner

If the business' reputation and financial viability are critically linked to its founder's passing


Provides income to the business to replace the skills and experience of one of the company owners

Top Salesperson

Losing your #1 sales rep could also mean losing big accounts


Many startups heavily rely on skillsets that core people bring to the table


To get a business to the next level, banks may require collateral for a loan

Key Person Life Insurance FAQ

Key Person Life Insurance is for employees whose absence will be a financial burden to the business and will be difficult and costly to replace. The policy provides funds that can help ensure business continuity if a key employee dies or becomes disabled (an additional disability rider may be required).

Key Person Life Insurance is an affordable way to help protect the long-term health of your business. It is readily obtainable and adds credibility to your company in the view of potential lenders and investors.

Key Person Life Insurance is used for a wide range of needs, but some of the most common purposes include:

  • Pay expenses while the company stabilizes
  • Provide funds for recruiting and/or training a replacement key employee
  • Secure business loans for growth and expansion
  • Pay off debts 

The main consideration will be the amount of coverage needed. You may want to start by considering the financial effects a key employee’s death would have on your company.

The business owns the policy and pays the premiums, so it is a form of company-owned life insurance, or COLI. When the insured dies or becomes disabled, the business serves as the beneficiary and receives the death (or disability) benefit.

Life insurance companies require the written consent of the key employee being insured.

According to the IRS, no. Premiums paid for a life insurance policy are not a deductible expense on a business’ federal income taxes.